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.

The Japanese public weighs structural reform

In my last post I discussed public opinion regarding fiscal stimulus, fiscal reconstruction, and the role of the state. In this post, I'll look at public opinion concerning the behavior of Japanese companies, labor market practices, and the role of the government in promoting microeconomic or supply-side changes in the Japanese economy as a means of promoting growth (i.e. structural reform).

Policymakers and the media were already discussing structural reform before Japan's asset bubble burst in 1991, most notably in the Maekawa Report, produced by an advisory council to Prime Minister Nakasone Yasuhiro headed by Maekawa Haruo, former president of the Bank of Japan, in 1986. But it was only after the bubble burst that the idea of significant reforms to the Japanese economy gained political traction, especially under the leadership of Prime Minister Hashimoto Ryutarō.

At a basic level, the Japanese public appeared to accept the idea that some type of structural reform is necessary if Japan is to remain prosperous in the future. In March 1997, before the wave of bankruptcies that would rock Japan's financial sector later that year, 72% of respondents said they thought "bold reform" was necessary, with only 19% disagreeing (and 9% not responding).

The public had largely embraced the arguments being made by Hashimoto and other political leaders: the Japanese economy needed to change. Japanese citizens did not just embrace the need for reform, they accepted that the government should take the lead in promoting reform. When asked by Asahi in May 1998 whether structural reform should be a government effort or a private-sector effort, 54% said government, with only 25% opting for the private sector (and another 21% not answering).

However, once the details of structural reform became apparent the Japanese public was more ambivalent. On the one hand, survey respondents accepted that structural reform should make Japan more liberal. Asked in a May 1998 poll which direction they thought Japan should head, 51% said it should aim for a "free competition" society that encourages ambition and talent, compared with 37% who said it should aim for an equal society with few disparities of wealth. When asked in the same poll whether decisions about pay should emphasize age and time of service or abilities and achievements, 70% said abilities and achievements and only 19% said seniority. On the other hand, the same poll find the public was divided over significant reforms to Japan's labor practices. Asked whether they supported hastening the pace of structural reform even if it meant job losses through corporate restructuring, respondents were evenly divided with 42% in favor and 41% opposed. Similarly, when asked whether they favored a society with lifetime employment or a society in which people change jobs, 53% favored lifetime employment, compared to 33% who favored job switching. In short, it seems as if the idea of a society in which individuals succeed or fail based on merit appealed to the Japanese public but not the steps the Japanese state would have to take in order to create such a society.

The public was no less divided when Koizumi Junichirō became prime minister in 2001, declaring there would be "no growth without structural reform" and that he would pursue "structural reform without sanctuary." As before, the public accepted the idea of structural reform in the abstract, with support over 70% throughout Koizumi's first year in office. (Although at the outset of the Koizumi government, the public was unclear what exactly Koizumi meant by reform: in late May 2001, only 23% were clear about what reforms Koizumi intended to implement, with 68% were unclear.)

However, from August 2001 the Japanese public soured on Koizumi's version of structural reform. Asked whether they were confident in structural reform, 52% felt uneasy about it, compared with 37% who felt confident. Asked whether they felt structural reform should continue, 44% favored it compared with 40% opposed, but when asked whether structural reform should take precedence over policies aimed at bolstering the economy, 56% said economic policies should take precedence compared with only 35% who felt structural reform should be the first priority. Similarly, for the first time a plurality (44% over 40%) opposed the Koizumi government’s program for disposing of bad loans.

At no point during the Koizumi government did the public support structural reform’s taking precedence over policies to revitalize the Japanese economy and create jobs. At the same time, when asked to name what was good and bad about the Koizumi government, the government’s economic policies were consistently rated as its worst feature. By late 2002, 50% of respondents cited macroeconomic policies as the worst feature of the Koizumi government for three straight months. It was not until April 2006, during Koizumi’s victory lap, that another policy area (foreign and security policy) passed macroeconomic policies as the least favored feature of the Koizumi government.

As noted in my previous post, the Japanese public was favorably disposed to structural reform directed at the public sector, since public-sector reforms were aimed at wasteful spending and corrupt practices. But during the Koizumi era, the Japanese public did not appear to have much appetite for labor market reforms or other reforms to promote more flexibility or competition in the private sector.

One can in fact argue that Koizumi exhausted public support for reforms that would create a more liberal Japanese economy. By the end of his tenure, the public began to express fears of growing inequality, and a majority believed, as a February 2006 Asahi poll found, that Japanese society was dividing into winners and losers based on whether or not one had money. At first, Japanese citizens did not hold Koizumi responsible for growing inequality, but by August 2006, Koizumi's last full month in office, 62% believed his policies were responsible, with only 30% saying that they were not.

Accordingly, as voters looked to the post-Koizumi period they hoped Koizumi’s successors would act differently. A June 2006 poll asked respondents whether they thought structural reform should continue: only 17% said it should continue unchanged, while 54% said it should continue but with different methods and 23% said the government should change directions entirely, a sentiment confirmed by a July 2006 poll that found that voters wanted the next prime minister to be a leader who listens to the opinions of others (67%) instead of making decisions based on his own thinking alone (28%). The same poll said the top priorities for the next prime minister should be addressing Japan’s aging, shrinking population problem (24%) and economic inequality (23%), followed by economic policy (18%) and fiscal reconstruction (16%).

One gets the distinct sense that by the end of the Koizumi period the Japanese people wanted a kinder, gentler politics and a more equitable, caring society. However much they supported Koizumi personally, they were not won over to his brand of Anglo-American neo-liberalism.

Polls in the post-Koizumi era show a reluctance on the part of the Japanese public to support significant changes to the surviving institutions of postwar capitalism. At the same time, the public was not eager to reverse changes wrought by Koizumi and his predecessors. For example, perhaps the biggest change in the Japanese labor market during the late 1990s and 2000s was the growing dependence of Japanese industry on non-regular and temporary workers who enjoyed little to no job security and few benefits. Many of these employees are women: at least half of women in the workforce are in non-regular positions, as suggested by this report (jp).

However, the Japanese public did not express a desire to change the laws that made the rise of non-regular employment possible. For example, when asked in January 2009 whether the use of temporary workers in manufacturing should be banned — a proposal that was included in the DPJ's manifesto later that year — only 30% of respondents supported such a ban, while 46% opposed one. Instead, the Japanese public wanted to protect the status of core workers, even if it meant the seemingly irreversible rise of non-regular employment, especially among Japan's young. A poll in February 2009 found that when asked whether the status of regular workers should be lowered in order to close the gap between regular and non-regular workers, only 32% agreed, 51% opposed. As in other industrial democracies that have seen the emergence of a dual labor force, privileged workers would prefer to retain their privileges (and jobs) even at the expense of non-regular workers. Protecting the status of secure jobs took precedence over other factors. For instance, when asked in a February 2009 poll whether firms should focus on protecting profits versus protecting employment, 69% said employment and only 20% said profits. The same poll found respondents willing to embrace work sharing — working fewer hours (with reduced pay), so that their employers could retain workers — by a margin of 68% to 19%.

Perhaps we should not be surprised that the Abe government's structural reforms — the third arrow of Abenomics — announced earlier this month proved to be so timid, especially when it comes to Japan's labor market. Whatever desire the Japanese people once had for structural reform appears to have dissipated. The prevailing sentiment now seems to be protecting the privileged status of regular workers, even if it means a growing population of non-regular workers with poor career prospects. If Prime Minister Abe were to propose bolder labor market reforms, one should expect considerable public opposition.

The next post will shift to attitudes about Japan's social safety net, looking especially at public dissatisfaction with the stability of the social security system.

Still before dawn

In the wake of Koizumi Junichiro's landslide election victory in 2005, the Economist published a survey on Japan under the headline "The Sun Also Rises," complete with a cover photo over the sun shining over Mt. Fuji.

The Economist was hardly alone in proclaiming that the Koizumi era marked the beginning of a new, optimistic era after the woe of the lost decade. If Koizumi was the face of a more politically assertive Japan, Toyota's rise was a symbol that despite economic stagnation, Japan's leading corporations could still compete globally, and in Toyota's case, best all challengers and set the industry's gold standard for production methods.

But just as many of Koizumi's reforms proved illusory once he left office, so too does Toyota's fall — with Toyoda Akio, its president and CEO, being raked over the coals in Washington — suggest that there was far less to the "Japan is back" meme than met the eye. That's not to say that Toyota's achievements weren't real; it's hard to argue with sales figures. But the idea that Toyota could be a twenty-first century national champion, symbol of a vibrant Japan, has been demolished. It seems that Toyota was plagued by the same pathologies that have plagued other industrial sectors and the public sector.

Patrick Cronin, writing at Foreign Policy's website, suggests that the Toyota debacle could be a blow to Japan's soft power. Maybe so, but in some way the scandal may simply reinforce the DPJ's message that the rot — which apparently left no corner of Japanese society untouched — which characterized the latter years of LDP rule needs to be swept away. In short, this scandal reinforces the idea that there are no shortcuts to recovery. As Peter Tasker argued in the Financial Times last week, the idea that Japan could continue to prosper on the back of exporters like Toyota has been punctured, making this scandal an opportunity for the DPJ to make its case that Japan needs to move away from export-led growth.

The campaign begins

After nearly a month of "phony" campaigning — passed quickly, didn't it? — the campaign for the 30 August general election began today as candidates filed their paperwork and parties submitted their lists for proportional representation voting. The main difference from now is simply that the long list of restrictions included the Public Elections law (available here, for the legally minded with too much time on their hands) take effect.

The most extraordinary thing about the phony campaign, and, it appears, the official campaign, is the lack of anything particularly extraordinary. As MTC observes looking at Asahi's latest poll numbers, support for the LDP and the DPJ in the election has barely moved since June, after the LDP's slight recovery following the Ozawa scandal. It has not moved despite the government's two trillion yen cash handout. It has not moved despite the alleged stirrings of an economic "recovery." It has not moved despite the LDP's persistent questioning of the DPJ's ability to wield power and to keep the Japanese public safe. It will not move despite the bizarre incident in Kagoshima in which a DPJ supporter purportedly mutilated two national flags to make a DPJ logo flag, seemingly making Aso Taro's case that the DPJ stands opposed to all things sacred — history, tradition, the flag, and the Emperor — while forcing Hatoyama Yukio and other DPJ officials to apologize profusely.

It will not change because in 2007, the public has simply had enough of the LDP. The public is not running to embrace the DPJ because it has more confidence in its policies or its leaders. It is revealing that of the LDP and DPJ policies addressed in the Asahi poll, majorities disapproved of all of them. More significantly, when asked whether they feel confident that the LDP and DPJ will be able to cover the costs of their policies or whether they feel uneasy about how they will fund the programs, the same number of respondents (8%) was confident that the parties could meet their commitments, while the same, larger number of respondents was uneasy about both parties' plans: 83%.

The lack of support for specific proposals does not mean that the DPJ will not enjoy a mandate from the public, especially if it wins a majority of its own in the House of Representatives. But the DPJ should be clear on what a mandate will represent.

Its mandate will be the same mandate the public gave to Koizumi Junichiro when he was the head of the LDP. Change this country. Do something to reverse the long decline of the past two decades. Do something to ease the fears of young and old about their economic security. And do something to reverse the precipitous decline in the confidence that citizens place in the leading institutions of Japanese life. It was not a mandate for for "neo-liberalism," or, more specifically, for postal privatization. It was a mandate for the force that was driving Koizumi, the eagerness to take risks in order to move Japan in a new direction. Accordingly, it should not be all that puzzling that polls have shown that these days the public is less than enthusiastic about the content of the Koizumi agenda: the enthusiasm for Koizumi was never really about his agenda.

Similarly, the LDP will lose on 30 August not necessarily because of any particular policy it has implemented since 2005 — although certain policies, like the eldercare system introduced in 2008 or the poor handling of the pensions scandal, have clearly exacerbated public anger — but because since Koizumi left office in 2006 the LDP quickly reverted to the party of stasis, acting to "listen to the voice of the people," as the phrase that became the party's mantra after the 2007 upper house election put it, only when the costs of not listening became steep enough to panic party leaders. And yet for all that risk aversion the LDP still stands on the brink of a devastating electoral defeat.

Accordingly, as the DPJ steels itself for the final push, as it seeks to drive its message home that it and not the LDP will act with the public's wellbeing as its top priority, it must appreciate the mandate it is about to receive from the public. It is not receiving a mandate diametrically opposed to Koizumi's mandate: it is receiving precisely the same mandate. Do something to fix this country. State your plans and deliver on them.

The public took Koizumi at his word and gave him an opportunity to fix Japan by fixing the LDP. Having been disappointed by that option, it is now the DPJ's turn.

To a certain extent, I think the DPJ is aware that its mandate is premised on the basis of delivering visible results to the public. It is certainly aware that the LDP's problem was not necessarily that the party as a whole was hopelessly wedded to the status quo — there is no shortage of decent, public-minded LDP members — but that the LDP system of government gave far too much power to the risk averse, to those who would change Japan only as much as necessary to ensure that the LDP continued winning elections. That day is done.

In less than twelve days, a substantial portion of Japan's 104.3 million voters will awaken and partake in what MTC poignantly refers to as "the thrill of making history happen." I suspect that as the campaign progresses and as the DPJ remains ahead of the LDP, more and more voters will realize this, and it may make a DPJ victory that much bigger.

The LDP's reformists continue to battle family politics

Surprisingly, given the howls of protest from within the LDP that greeted Suga Yoshihide's proposal to include a ban on hereditary candidates in the party's election manifesto, the LDP appears ready to include restrictions on political inheritances in the manifesto after Suga met with Koga Makoto, the LDP's chief elections strategist, and Ibuki Bunmei, former LDP secretary-general and cabinet minister. Asahi reports that the proposed restriction will take the form of a regulation that will require a retiring politician to transfer his political organization's funds to the party upon retirement.

Given the prime minister's opposition to the idea, I wonder whether the agreement between Suga and Koga will be enough to secure inclusion in the manifesto.

Nevertheless, the party's reformists have latched on to the idea, suggesting that whatever happens with the LDP's manifesto, it will not go away. Restricting political inheritance is only the latest means for the reformists to run against their own party. Yamamoto Ichita, in an explication spanning four posts, frequently notes that forty percent of LDP Diet members are hereditary members — and says (unironically, given the phrase's original context) that the party needs to be able to draw upon the "best and the brightest." Giving preference to hereditary members, he argues, has turned potentially talented individuals away from the LDP. (There may be something to this: I wonder how many of the DPJ's younger members had hoped to earn the LDP's endorsement and turned to the DPJ only upon finding the LDP's doors closed to them.) Yamamoto also is unconvincing on the constitutionality of these restrictions, treating it in the context of restrictions on the freedom to choice one's occupation (Article 22), rather than, say, political discrimination on the basis of family origin (Article 14).

Through it all, Yamamoto and the other advocates fail to demonstrate why this is such an urgent problem at this point — and why it should be a prominent subject for discussion in the general election campaign. Ultimately discussions like this amount to political bait-and-switch, efforts by LDP reformists to sell the idea that the LDP has the potential to be the party of change, if only the reformists are given the run of things. 2005 may seem like a long time ago, but I hope voters remember what happened then: voters rewarded Koizumi Junichiro and his "children" with a huge majority, stripped of the hard core of Koizumi's "opposition forces," only to have the LDP readmit nearly all of the postal rebels mere months after Koizumi left office. The past four years have been one long retreat from the promise of Koizumi's new party. Why should the voters trust the LDP to be any different this time around, despite the promises of Nakagawa Hidenao and company?

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.

Aso falls below ten percent

NTV has just released a new opinion poll conducted over the weekend that shows that Aso Taro's approval rating has fallen below 10%, clocking in at 9.7% compared with 17.4% the previous month. His disapproval rating in the same poll rose seven points to 76.2%.

Among the 55 respondents who said they support the Aso government, a plurality (35.7%) said they supported the government because they could not see anyone else doing the job, with another 23.2% supporting the government because they support the ruling parties.

As for those in opposition to the government, the single greatest reason was a lack of hope in the government's policies (33.3%), followed by a lack of leadership (28.7%), and a lack of confidence in Mr. Aso's personality (20.3%). Advocates of a cabinet reshuffle should note that only 2.1% of respondents cited the cabinet lineup as their reason for not supporting the cabinet (although obviously some might believe it to be an ancillary reason).

Meanwhile the same poll found that nearly twice as many respondents (51.9% to 26.2%) favor a DPJ-centered government after the next general election than favor an LDP-centered government, and more than twice as many respondents (40.6% to 16.3%) said Ozawa Ichiro ought to be prime minister as said Mr. Aso should be prime minister (although 43.1% of respondents didn't know or didn't answer the question). In the big list of potential prime ministers, Mr. Ozawa received the highest support at 15.6%, more than Koizumi Junichiro and every other politician, although once again a large number of respondents (53.3%) did not know or did not answer the question.

The point of this poll is not that Mr. Aso is challenging Mori Yoshiro for the title of least popular LDP prime minister ever. The difference between 15% approval and 9% approval seems purely symbolic, the consequence of the amputation of a digit and nothing more.

But it does confirm that the public has lost whatever confidence in the Aso government and the LDP it still had. Supporters don't quite know why they're supporting the government, while opponents know full well why they do. The LDP is dithering while their lives are getting worse; more than sixty percent of respondents said that their economic circumstances had gotten more or less worse since last year.

One consequence of Mr. Koizumi's criticism of Mr. Aso is that it reinforces the image of a governing party incapable of ruling itself, let alone the country. Public discussion now concerns whether Mr. Koizumi will widen rifts within the LDP to the point of blocking the passage of the bills related to thesecond supplementary budget, rather than on the government's efforts to overcome the economic crisis. The Aso government has forfeited all control of the public agenda. Efforts to try something different — talk, for example, of a "Green New Deal" (something the DPJ has also discussed) — gets lost in the noise generated by discord within the LDP.

That was the most incisive portion of Mr. Koizumi's critique. Mr. Koizumi dismissed the government's blaming its failure to move an agenda on the divided Diet — Mr. Aso repeated this complaint recently, saying that he was jealous at the speed with which the US Congress acted on the Obama administration's stimulus plan and blaming the opposition for retarding the legislative progress — by claiming that if the two houses and two leading parties disagree, they should nevertheless be able to negotiate on a plan that meets the approval of the public (and, one could add, the government has the trump card of the supermajority if the opposition were to opt for obstructionism instead of good-faith negotiations).

I think the public is sympathetic to Mr. Koizumi's assessment. The public sees government inaction, and the blame the government for it, not the DPJ. The DPJ may not be beloved by the Japanese public, but the public is not looking for a party to love. It is looking for a government that will be able to lead and show some creativity in policymaking. The LDP and the Aso government have demonstrated neither.

It is for this reason that talk of jettisoning Mr. Aso and trying again with yet another leader before a general election is fanciful. First, it is hard to see Mr. Aso leaving willingly. Given his ability to cocoon himself from reality, Mr. Aso may be able to hold on to power simply by denying that anything is his fault, blaming his struggles on the opposition, the "once in a century" economic crisis, the media, etc. Second, the LDP's old guard seems reluctant to countenance replacing the prime minister before an election, given that most of the names mentioned as possible replacements are names more acceptable to the LDP's reformists — weak in numbers — than to the party at large and the old guard. The marriage between Mr. Aso and the LDP appears truly to be until death do they part.

The question, however, is whether the prime minister will be able resist pressure to call an election following the passage of the 2009 budget. Public approval in the single digits has the paradoxical effect of raising pressure on the government to call an election while reducing further the LDP's desire to face the public. It remains to be seen what will give way first, the irresistible force that is public opinion or the unmovable object that is Mr. Aso's LDP.

The DPJ may not be up to the task, but the alternative of so bereft of legitimacy and authority that it seems certain that Mr. Ozawa and the Democrats will get their chance to govern.

Koizumi laughs

Did Koizumi Junichiro just kill the Aso government with a laugh?

Speaking at a meeting of the Diet members' group for the promotion of postal privatization, an LDP study group featuring a number of leading reformists, including Nakagawa Hidenao, Shiozaki Yasuhisa, Takebe Tsutomu, and Ishihara Nobuteru, Mr. Koizumi commented on Aso Taro's recent remarks about "revising" postal privatization.

"More than being angry," he said with a slight smile on his face, "I just have to laugh. I am just totally fed up." (I'm deferring to MTC on the translation.) Asahi describes Mr. Koizumi's criticism as scathing, but watching the video Mr. Koizumi seems more dismissive than angry. He dismissed Mr. Aso as petty and shiftless, unworthy for the role of prime minister. He went on to the prime minister for not listening to dissenting opinions and for have a serious lack of common sense, which have eroded public trust in his leadership. He further suggested that the prime minister should not use the supermajority to pass the bills enabling the second supplementary budget's direct payment plan, which the press is reporting as a suggestion by Mr. Koizumi to his followers to vote against the bill should it come before the lower house a second time.

But more than that, in his laugh Mr. Koizumi effectively waved off the two-and-a-half years of LDP rule since he left office: the readmission of the postal rebels, the backsliding on structural reform, the resurgence of the LDP's old guard and the bureaucracy, the mishandling of the pensions fiasco, the near-total failure to move an agenda despite the supermajority, and now Mr. Aso's turning on Mr. Koizumi's legacy in order to save himself. Without having to say any of that, Mr. Koizumi declared the current government and the LDP bankrupt and unworthy of governing, a declaration amplified by its timing, coming in the midst of uncertainty regarding the passage of the budget and the bills related to the second stimulus package and the government's dismal approval ratings.

Mr. Aso has opted to say nothing in response to Mr. Koizumi, saying that he didn't hear the speech and so won't comment. Yomiuri quoted someone in his retinue dismissing Mr. Koizumi's remarks as "no big deal" because the former prime minister had already decided to retire.

It's possible that Mr. Koizumi's remarks will have no impact. But it's also possible that Mr. Koizumi has cut the thread keeping the reformists loyal.

Jun Okumura has hypothesized that discontented LDP members will not defect but will do everything in their power to distance themselves from Mr. Aso (his post includes a handy list of behaviors to look for). The question now is whether Mr. Koizumi's intervention disproves Jun's hypothesis, whether Mr. Koizumi's "anti-Aso declaration" will serve to rouse the reformists to vote against the government, which would presumably topple the government and set in motion an alignment of some sort during the run up to a general election. I think Jun's logic is sound, but it will be tested by this latest twist in the LDP's collapse.

Perhaps the clearest sign that Mr. Aso is in trouble is that Mori Yoshiro, the self-appointed guardian of the past three prime ministers, did not dismiss Mr. Koizumi's remarks outright. "Mr. Koizumi," he said, "ought to watch his words, but the prime minister also talks too much." Not exactly a ringing endorsement of Mr. Aso.

The foolish crusade against the House of Councillors

In May 2008, I wrote about the creation of an LDP study group with the goal of eliminating the House of Councillors — the Diet's upper house — and moving to a unicameral system, a proposal that I suggested was an anti-democratic temper tantrum in response to DPJ control of the upper chamber.

This proposal and its advocates, however, are still at work trying to undermine Japanese democracy. The study group is working hard to introduce a plank demanding a unicameral system into the LDP's manifesto for the next general election. As Yamamoto Ichita, a member of the study group, explains, the proposal is not just to dissolve the upper house but to dissolve both houses and create a new unicameral legislature with significantly fewer legislators. The plan calls for the number of legislators to be cut by thirty percent and for single-member districts to give way to prefecture-wide multi-member districts. He claims it isn't simply a response to the DPJ's control of the upper house.

As I noted last year, given that such a radical change would require Japan's first ever constitutional amendment (Article 42: "The Diet shall consist of two Houses, namely the House of Representatives and the House of Councillors"), and given that the days of the government's supermajority are almost certainly numbered, this proposal is singularly farfetched. It is doubtful whether this proposal would receive majority support, let alone supermajority support. Prime Minister Aso is circumspect; Komeito is favorably disposed to cutting the number of legislators but opposed to removing the upper house; and the DPJ's Ozawa Ichiro thinks this should not be a subject for discussion at all before a general election.

So why am I writing about this proposal?

Only because it shows how batty some LDP members have gotten as their party has decayed. Not only do this proposal's proponents — including the past four prime ministers — ignore the steep obstacles standing in the way of ever making a unicameral system a reality given present political circumstances, but they are so short-sighted that they fail to realize that given the probability of the LDP's going into opposition, the upper house will be a useful tool for crafting an LDP revival.

The DPJ, the upper house's largest party but not the majority party, needs every vote it can get in order to control the upper chamber. For now, it is dependent on the Social Democrats and the People's New Party. Even if the DPJ wins an absolute majority in the lower house and forms a government, it will still have to cobble together working coalitions in the upper house. In this situation, the LDP will be powerful both as a potential partner and as a potential spoiler of DPJ plans. The same will apply to Komeito. Surely the members of the coalition parties, surrounded by signs of impending collapse, have begun thinking about what life in opposition will be like. Surely they know all too well that the upper house can be a useful platform for disrupting government business.

But the unicameralists not only exhibit a shortsightedness on the part of LDP members, they show how LDP members have looked to attribute policy failures to anyone or anything but their own party. Naturally there are exceptions, most notably Mr. Koizumi and his followers. But the desire to blame structural forces — the electoral system, the parliamentary system, the policymaking system — is persistent, and unconvincing.

How can the same structures that in many ways sustained LDP rule now suddenly be contributing to the LDP's demise? For example, if the much-vilified bureaucracy, Nakagawa Hidenao's bete noire, has misgoverned Japan, the obvious question is why the LDP has allowed the bureaucracy to make such a mess of things. Mr. Nakagawa would answer that the bureaucracy is an all-powerful complex — which Mr. Nakagawa explicitly describes as akin to Eisenhower's "military-industrial complex" — that is capable of manipulating the LDP, the media, the universities, and so on.

Not good enough. At some point the LDP, accountable to the public for policy, must pay the price for failures. No more excuses. No more scapegoats.

Aso the impervious?

The bad news keeps coming for Prime Minister Aso Taro.

He has been hit with another wave of negative poll results. In Yomiuri, his approval rating is a hair over 20%, while his disapproval has broken 70%, rising to 72.3%. In the same poll, Ozawa Ichiro remains gained another three points in the question of who would be better as prime minister, while Mr. Aso lost two more points — giving Mr. Ozawa a 39% to 27% advantage. It may not be an overwhelming lead, but considering that the LDP has long hoped to make Mr. Ozawa a liability for the DPJ, Mr. Ozawa's now persistent lead is enough to suggest that the LDP will have a hard time making the general election about Mr. Ozawa (as opposed to the LDP's numerous mistakes). Mr. Aso's numbers were just as bad in the Fuji-Sankei poll, 18.2% in favor compared with 71.4% unfavorable. Reportedly Mr. Aso received comparatively high marks for his personality, but receives little support for his foreign and economic policies, and his leadership capabilities. Moreover, Mr. Ozawa enjoys a 41% to 25.2% advantage over Mr. Aso, and receives higher marks in a variety of categories.

It is hard to put a positive spin on these results, although Mr. Aso did his best on Monday night in a live appearance on Fuji TV. He maintained that his unpopularity is a function of the economy, which implies that if he manages to fix the economy, the Aso LDP (recall that the LDP is using this phrase on its recent publicity material) will be fine. I suspect there are at least two things wrong with his response. First, if by economy he simply means the recession, Mr. Aso is overly optimistic. Clearly the LDP's spectacular unpopularity among Japanese voters predates the recession and the global financial crisis; its causes are numerous, with the recession being the latest black mark. Accordingly, if the LDP somehow manages to revive the economy in the next nine months — a feat that at this point would be miraculous — the Aso government's numbers will not magically elevate to new heights.

But such talk of recovery, at least before an election, is fanciful. Japan's economy shows no signs of becoming any less dependent on the US economy, and with no signs of a US recovery in 2009, Mr. Aso will be waiting in vain. Nevertheless, he is doing all he can to appear cool, impervious to the signs of his government's demise. (Indeed, I watched his Fuji TV appearance, which was a calculated effort to show just how calm the prime minister is. One segment showed Mr. Aso in his office, dressed casually and surrounded by piles of books — continuing to sell this image. He turned on the stereo and proceeded to belt out Simon and Garfunkel's "Bridge over Troubled Water." Mr. Aso may be in need of one of those. Perhaps his singing the song was a cry for help.)

Meanwhile, at the same time that Mr. Aso is facing ever greater disapproval, Watanabe Yoshimi, former administrative reform minister and prominent critic of Aso Taro, announced Monday that he will in fact by leaving the LDP on Tuesday, following through on his remarks of last week.

Mr. Watanabe told reporters Monday that before the lower house votes on the government's second supplementary budget, he will deliver his declaration of secession to LDP headquarters. He insisted that he will begin building a popular movement outside of the LDP in the hope of attracting discontent LDP members in Nagata-cho and in local chapters. In other words, Mr. Watanabe hopes that if he builds it — it being a new reformist party — they will come.

There is reason to be skeptical that this approach will work. As Jun Okumura suggests, Ozawa Ichiro's overt appeals for LDP defections will likely have the opposite effect, leading disgruntled LDP members to hang Mr. Watanabe out to dry so as not to give comfort to Mr. Ozawa. There remain precious few signs that Mr. Watanabe will have company in his new venture. I still give him tremendous credit for taking this step into the unknown, but thus far it is not the kind of move to shake the foundations of the Aso government any more than they have been shaken by wider events.

Indeed, in his Monday TV appearance, Mr. Aso shrugged off Mr. Watanabe's decision as an "individual matter," saying that he had no fear that Mr. Watanabe will be only the first of a series of defections.

Mr. Aso was similarly cool to Mr. Ozawa's appeal for a negotiated dissolution of the lower house, in which the DPJ would trade support for the FY 2009 budget for an agreed timetable for a general election, insisting that policy remains his top priority.

Mr. Aso's cool demeanor, however, should not distract observers from the extent of the crisis facing the prime minister and the LDP. It is too early to gauge the impact of Mr. Watanabe's defection, but I suspect that beyond numbers (which may or may not be forthcoming) Mr. Watanabe may undermine the government by exposing the illusion of the LDP as anything but an exhausted party resistant to structural change. Despite the tendency of some intellectuals to blame Japan's problems on Mr. Koizumi, the former prime minister's popularity has lingered. Whatever their thoughts about his specific policies, his message of a drastic break with the LDP's old way of conducting government undoubtedly continues to resonate. By leaving the LDP, Mr. Watanabe has made clear the extent to which Mr. Koizumi failed to change the LDP. Other reformists may remain in the party, but it is entirely possible that they will go down to defeat, while Mr. Watanabe, standing alone and for now without the prospect of a DPJ challenger, may survive to fight on after the general election.

And while Mr. Koizumi may have failed to change the LDP, it increasingly appears that he successfully delivered on his promise to destroy the LDP.

Recommended book: Curing Japan's America Addiction, Morita Minoru

For Morita Minoru, a longtime political commentator, something is rotten in the state of Japan.

"Japanese politicians," he writes, "have made serving the American government a priority when they should be focused on serving the Japanese people. Japan has lost its sovereignty to the United States. Our nation has been invaded and occupied by invisible forces."

The above comes from Mr. Morita's first English-language publication, Curing Japan's America Addiction, a beautifully designed book published by Chin Music Press, a small Seattle-based press that "[believes] in giving voice to writers who have new ideas, new thoughts."

In what is a fundamentally conservative book — contrary to what co-translator Bruce Rutledge calls "the left's response to...Shintaro Ishihara's The Japan That Can Say No" — Mr. Morita laments the demise of postwar Japan at the hands of Japanese "neo-conservatives" like Koizumi Junichiro, Abe Shinzo, and their allies in the Japanese media. He believes that the Japanese establishment, including politicians, bureaucrats, and journalists, have betrayed their country by placing the interests of the United States before the interests of the Japanese people. Mr. Morita's attack on Mr. Koizumi is not a left-wing attack. Mr. Morita is in fact an unabashed supporter of the LDP's old conservative mainstream, an argument he makes at length in his 2007 book 自民党の終焉 (The end of the LDP). He believes that the old conservative mainstream — the "true conservatism," he calls it — created an egalitarian, middle-class society, and prevented Japan from remilitarizing while maintaining a healthy distance from the U.S.

For Mr. Morita, however, over the past three decades the LDP has gradually been remade in the image of the U.S. Republican Party, which in turn has resulted in the introduction of neo-liberal reforms that have served to create growing income disparities in Japan, destroy public services, and channel Japan's wealth to the U.S. While he criticizes Nakasone Yasuhiro, prime minister from 1982-1987, for moving Japan down the path of excessive dependence on the US, he reserves the bulk of his anger for Mr. Koizumi, perhaps because Mr. Koizumi has been blanketed with praise by the domestic and foreign press.

There is much to recommend in Mr. Morita's book. He writes with genuine feeling about the decay of Japan's rural regions and the growing income gaps. His critique of Japanese foreign policy is even more effective. He is particulary incensed by the effort by Japanese and American conservatives to provoke China and drum up confrontation with North Korea: as in the case of economic reforms, Mr. Morita believes that the hawkish foreign policies of Prime Ministers Nakasone, Koizumi, and Abe were more in the interests of American conservatives than the Japanese public. He writes: "The US-Japan alliance is strengthened as tensions between Japan and China rise. If the Asian region becomes unstable, American influence rises." He also deftly explores the corrosive impact of the alliance on Japanese domestic politics, chronicling how the LDP used threats to withdraw subsidies to Iwakuni to influence Iwakuni's 2008 mayoral election (discussed in this post). Mr. Morita's arguments are all the more powerful considering that his might be the only such book that has been translated into English.

But I cannot recommend this book without some reservations. This book is ultimately undone by Mr. Morita's anger at the state of his nation. Much like the American left during the darkest days of the Bush administration was desperate to pin every failing on George W. Bush, so too is Mr. Morita keen to blame Mr. Koizumi and, to a lesser extent, Mr. Abe for the problems facing Japan today. In this he overreaches, giving Mr. Koizumi far too much credit for transforming Japan. Clearly the structural changes that horrify Mr. Morita did not emerge overnight under Mr. Koizumi's watch. Income inequality may be more a function of Japan's demographics than any reforms implemented by Mr. Koizumi at Washington's behest. The education system was broken long before Mr. Abe made patriotic education a priority. The Japanese economy has been impacted more by companies departing Japanese shores than by successful regulatory reform (although as Len Schoppa argues, it is not entirely clear that the former is a result of the lack of the latter). Indeed, Mr. Morita completely skips over the post-bubble decade in order to lambaste Mr. Koizumi for his treachery.

This is a major failing of Mr. Morita's account of contemporary Japan. In his desire to defend the postwar system from its neo-conservative enemies, Mr. Morita blithely ignores the question of whether the postwar system was still intact by the time Mr. Koizumi took office in 2001. Arguably Mr. Koizumi — far from acting as an American stooge, implementing a US wishlist of regulatory reforms — was doing the best he could to rescue something from the wreakage. One could argue that Mr. Koizumi was mistaken in his priorities as he tried to build a new system, but Mr. Morita unfairly insists that Mr. Koizumi was not even acting in good faith in pushing for reform without sanctuary.

It is in this sense that Mr. Morita's conservatism comes through. Mr. Morita, for example, explicitly sides with the People's New Party in their fight against postal privatization, arguing that postal privatization has deprived small villages of service while leaving the privatized postal system ripe for the picking by American corporations. (How exactly US corporations would get at the newly created postal bank when an American hedge fund could not even manage to take over a sauce manufacturer is beyond me.) Mr. Morita ignores the role played by small post offices in perpetuating LDP rule and therefore stifling Japanese democracy, which Mr. Morita desperately wants to see strengthened. In this sense he wants to see the old LDP order restored; he supports Ozawa Ichiro's Democratic Party of Japan — Jiminto no shuen is a long argument on behalf of a change of ruling party — because he believes that it is the proper heir of the LDP's old conservative mainstream, now that the LDP has been "republicanized."

This is ultimately my problem with Mr. Morita. Despite his passionate account of the problems of contemporary Japan, he is woefully short on ideas for how to make Japan better. Like a good conservative, Mr. Morita's answers often involve appeals to the postwar past. But as admirable as the achievements of postwar Japan were, it is quixotic to long for their return. Indeed, was the golden age really a golden age? Japan may have been more equal and Japanese workers more secure, but as Schoppa argues, this social safety net was the result of the state's offloading welfare roles to companies and wives.Were rural areas that much better off, or were they facing the beginning of a long decline that continues to the present day?

It is little good looking back to postwar era for guidance. The postwar system is out of place in a globalized world, in which companies can move offshore or obtain capital from abroad with considerable ease. The idea of providing welfare indirectly — including through public works programs for rural areas — has grown too costly socially and fiscally. (Japan's fiscal situation also goes unmentioned in this book.) Providing a social safety net without swelling the national debt is a challenge that demands considerable creativity from Japan's politicians, creativity that has thus far been lacking.

Ultimately that is the problem: in the face of the new global economy, Japan has suffered debiliating intellectual paralysis that has prevented it from coherently negotiating the terms of its engagement with the global order. Mr. Koizumi and the neo-liberals have provided one approach, an approach that appears to have been eclipsed thanks to the global financial crisis. Mr. Morita and the remnants of the LDP mainstream have strived to provide another, but all too often it amounts to pining for a bygone era, the very essence of conservatism. In the debate between the two extremes — the Koizumian neo-liberals and the "paleo" conservatives who rail against "market fundamentalism" — there is a desperate need for a middle ground that can reconcile demands for higher levels of social protection with greater levels of economic openness. Japan may ultimately grope its way to a new grand bargain, especially as the neo-liberal alternative loses its glamour, but in the meantime it is struggling to find a set of ideas that offer the elusive blend of growth and protection.

Nevertheless, Mr. Morita deserves credit for fearlessly trying to diagnose Japan's problems, and Chin Music Press deserves credit for introducing his ideas to a foreign audience.

The lessons of 2008

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

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

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

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

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

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

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

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

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

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

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

What changed?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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