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.

Will the DPJ's uncontested election have consequences?

Noda Yoshihiko's decision not to challenge Ozawa Ichiro for the DPJ presidency has prompted the expected comments from LDP politicians about the DPJ's failings.

Aso Taro, never one to hold his tongue, said Saturday in Kagoshima, "A party leadership election is an especially good opportunity to fight over policy. If one cannot speak without hesitation, is it an open people's party?"

Writing at his blog, Nakagawa Hidenao approvingly cited a Sankei editorial that questioned whether the DPJ can truly be called democratic. He criticized DPJ backbenchers for their weakness in the face of Mr. Ozawa, for their fears that opposing Mr. Ozawa would harm their electoral prospects. (That might sound similar to my own argument — more in a moment — but I don't begrudge their anti-Ozawa group their cowardice. They were being perfectly rational in weighing the consequences for their careers in challenging Mr. Ozawa.)

Finally, Yamauchi Koichi, the Koizumi child whose blog seems to shadow Mr. Nakagawa's, declared that Mr. Noda's decision marked "the beginning of the end of the DPJ."

(Naturally they will also be criticizing coalition partner Komeito for the uncontested election it will be holding two days after the DPJ's.)

As I've noted before, the crowing of LDP reformists like Messrs. Nakagawa and Yamauchi speaks more about their position within the LDP than the failings of the DPJ. Marginalized by the very infighting that Mr. Nakagawa praises as healthy for a political party, they are reduced to weak attempts to cut the DPJ down to size, to deprive it of reformist credentials in the hope that the public will look to the LDP for reform, as it did under Koizumi Junichiro.

The idea that the DPJ will suffer a blow to its reputation — at least a blow severe enough to hurt it at the polls come election time — is laughable; I doubt that the voting public will be distracted by such sophistry, especially with the economy going down the tubes. The next general election, despite the best efforts of LDP spinmeisters, will be about the LDP's rule since 2005 (and before). It will not be a referendum on the DPJ's fitness to govern.

MTC argues, in fact, that the DPJ dodged a bullet by not having a contested election in which the party's platform from the 2007 upper house campaign would be picked apart piece by piece. MTC explains at length why Mr. Ozawa's apparent reversion to baramaki seiji — a favorite slander of the aforementioned LDP politicians — should not be taken at face value.

"It is Ozawa's intent to go back to the rural voters, the ones who voted for the Democrats in 2007 praying that the Democrats would bring the revival of special subsidies, tax cuts or government handouts, and say to them, 'Sorry, as you know, I have argued long and hard for you to get the help you deserve but the b_____ds in the House of Representatives have turned down every one of my proposals. We need your votes to kick these b_____ds out of office.'

"Ozawa is guessing -- and it is a reasonable guess -- that he can go to the well twice with the same set of promises."

I am in absolute agreement with MTC on his account of Mr. Ozawa's designs. I think this is precisely what the DPJ leader has in mind, and what's more, I think it will work: the battle for the twenty-nine single-member districts last summer was just a warmup for the campaign for lower house seats in the same prefectures, prefectures in which the DPJ has performed poorly in the past two general elections. Given just how little progress the LDP has made since its defeat last summer, there is good reason to believe that it will work again.

And so I accept MTC's argument that a party election would have done more harm than good. But only slight harm, I think, especially since no candidate emerged until late in the summer. An abbreviated campaign, long after Mr. Ozawa consolidated the necessary support to win, would have been windowdressing, and little more. Mr. Noda might have scored a point or two, but he would not have been able to undermine the manifesto wholesale, as Mr. Maehara and others have hoped to do earlier in the summer.

Meanwhile, I still maintain that the cowardice of the DPJ's young turks is part of the story of why Mr. Ozawa will be reelected uncontested next month. Perhaps cowardice is the wrong word. Extreme risk averseness? Mr. Maehara and others have good reason for not following through on their destructive path that would have turned the leadership election into outright civil war. There was little to gain from such a course. If somehow they were able to defeat Mr. Ozawa, the party that they would claim as spoils would likely be so broken that their victory would mean the inevitable end of the DPJ (pace Mr. Yamauchi, who thinks that not having an election is the beginning of the end for the DPJ). If Mr. Ozawa fended off their challenge, they would be finished within the party. Either way, a brutal campaign following upon Mr. Maehara's bold rhetoric would lead to a dead end for the young turks. In the face of these circumstances, naturally they were collectively reluctant to take the final step.

MTC may be right that they were also swayed by the electoral consequences of a contested election. Perhaps Mr. Maehara became aware of the dangerous path he was on when LDP officials began praising him. But I think — and this is just a product of my basic assumptions — that they were first swayed by the personal consequences of a challenge to Mr. Ozawa. Not because of pressure from Mr. Ozawa himself (as argued by Jun Okumura): if the press narrative is to be believed, Mr. Ozawa gave nary a thought to the party election. While some DPJ members came out publicly on behalf of an uncontested election, Hatoyama Yukio praised some of the potential challengers and endorsed the idea of a contested election. He might have been acting differently in private, but the public message was designed to dial down the intensity in the event of a contested election, not stamp out the very idea of dissent.

The point is that Mr. Ozawa and the other party leaders ultimately have little to fear from the dissenters. Policy rifts continue to exist, but young turks in both the DPJ and the LDP appear to lack the willingness to reject their parties and go off on their own. Hence the proliferation of nonpartisan study groups, which it increasingly seems are not proto-parties but substitutes for the parties the young turks might form if they could do so with minimal risks.

Faced with a situation that could very well have resulted in their being forced to break with the DPJ, the party's young turks have backed off, presumably saving their energy for a fight with better odds and in the meantime devoting their energy to study groups.

In the meantime, the party remains in the hands of the formidable Mr. Ozawa.

Noda backs down

I wrote on Wednesday that Noda Yoshihiko was prepared to stand against Ozawa Ichiro in the September DPJ leadership election.

It seems, however, that Mr. Noda's own faction is reluctant to back him.

(As of Friday morning, Mr. Noda has announced that he will not be running against Mr. Ozawa next month. It seems that Mr. Ozawa will get his uncontested election to a third term after all.)

He met with the executives of the Noda group Thursday, who cautioned prudence and appealed for party unity. The Noda group has twenty-four members, a third of which are first-term Diet members, who appear unwilling to rebel against Mr. Ozawa. The result is that Mr. Noda may find it difficult to find the requisite twenty Diet members to endorse his candidacy, although the Maehara group may step in to provide the necessary support.

Whether there is or isn't a contested DPJ leadership election at this point is irrelevant. In their tendency to speak loudly against Mr. Ozawa's leadership only to back down from overtly challenging it, it seems that the DPJ's young turks have revealed their cravenness. For all their bluster, none was willing to risk his career to present their arguments as a candidate for the leadership. Perhaps they shouldn't be blamed: Mr. Ozawa's position is unassailable.

But what this episode should take some air out of the suspicions that Maehara Seiji and his compatriots are in cahoots with certain LDP members and looking for their first opportunity to jump from the party. If they are unwilling to take the risk of going down to defeat in a party leadership election, why would they be willing to take the far riskier step of defecting from the party and striking out on their own?

The DPJ's unity, it seems, is assured.

Noda to step in front of the Ozawa train

After months of deliberation, one of the DPJ's young turks opposed to the leadership of Ozawa Ichiro has indicated that he is prepared to step forward to run against Mr. Ozawa in next month's leadership election.

Noda Yoshihiko, head of a small DPJ faction close with Maehara Seiji's group and the chairman of the DPJ's public relations committee, has indicated that he is finalizing plans to challenge Mr. Ozawa in his bid for a third term as DPJ president.

Even with Mr. Noda's candidacy, the outcome of the election is not in doubt. Mr. Ozawa appears to have the support of more than half the party's Diet members, and also enjoys considerable support among the party's local chapters and the party's nominees for the next general election (who also have a vote in the election).

The DPJ leadership has its patsy: Mr. Noda will spare the party the "embarrassment" of an uncontested leadership election. (The LDP members who have hammered on this point surely deserve some credit for making an issue of the perceived lack of democracy within the DPJ.) Mr. Noda's late announcement is truly the best possible outcome for the DPJ. By waiting this long to step forward, Mr. Noda has spared the party of a summer of DPJ civil war, which would have undoubtedly dominated the political headlines and undermined the party's public image. Given that the party's ruling troika is thinking more about the possibility of an autumn general election than the leadership election, the leadership election will be largely perfunctory.

Mr. Noda — renowned, at least according to his Japanese Wikipedia entry, as the party's best orator (he reportedly spoke for twelve hours straight outside Tsudanuma station in Chiba in his first campaign for the lower house) — will likely suffer little from having been defeated by Mr. Ozawa, and will be in a position to run again in a future party election. And the party's young turks now have their candidate who can vent their grievances about Mr. Ozawa's leadership.

They better hurry: the election is a month away.

Ozawa unconcerned

The campaign for the DPJ's 21 Sept. leadership election will begin in just over one month.

Not surprisingly, no candidate has stepped forward to challenge Ozawa Ichiro in his bid for a third time. Mr. Ozawa has announced that he will not be thinking about the party election until after next week's Obon holiday.

One by one, potential challengers have stepped forward only to back down in the face of overwhelming odds.

In late July, Okada Katsuya, the great, white hope of the anti-Ozawa groups, dropped hints that he was thinking strongly about a bid to return to the helm of the DPJ. He acted quickly, however, to snuff out any talk of his candidacy, declaring he had no great desire to run. Mr. Okada spells out his reasoning in a post at his blog, noting that while he doesn't want to run, he does want a discussion on the party's manifesto for the next general election, which he thinks must be more specific to strengthen the party's position in the general election campaign.

Edano Yukio, a member of the Maehara group, and Noda Yoshihiko, head of a small conservative DPJ faction close to the Maehara group, have stated their desire to oppose Mr. Ozawa in September, but neither man has made his candidacy offical. Both have said that they'll decide later this month; Asahi says that the Maehara group and its satellite prefer Mr. Okada or Mr. Noda to Mr. Edano or Sengoku Yoshito, who hinted at a run for the leadership earlier this summer.

Given that the campaign is shaping up to be the Maehara-Noda bloc versus the rest of the party, Mr. Ozawa can surely rest easy and act magnanimously towards his rivals.