Chief Investment Officer
the new japanese administration
Ryu Murakami’s article ‘Japan Comes of Age’ on New York Times (Sep.7) rightly grasped the atmosphere after the election in Japan. Murakami was asked by the NYTimes to report on the mood in Japan, and that's what he focused on.
If we describe the mood in Japan after the landslide loss of Liberal Democratic Party (we would not say it was landslide victory of Democratic Party) in one word, it is rather ‘anxiety’ than ‘melancholy’, which NYT used. Yes, DP won. But it was not yet a revolution. Revolution is bringing down the existing regime, and building a new system on the old rubble. This has not taken place yet, and no one knows if it will be successful in the end.
The DP itself might not be deemed deserving to steer Japan toward the next stage. A political party should be founded under a banner of basic value or philosophy, yet the DP lacks it. The party seems to be a collection of anti-LDP groups. The LDP itself was founded 50 years ago as a coalition of two conservative powers, in response to the rising of Socialist Party. At that time, the world was divided into East and West, and it was enough for LDP to made use of anti-socialism mood, instead of founding their own value. Through its long period of domination, LDP had developed strong give-and-take relationships with bureaucracy and business community, while subsidizing local civil projects and farmers of each Congressman’s electoral district by increasing national debt.
After the fall of the Berlin Wall, however, the LDP has lost its main value and could find no other reason to keep their regime than to maintain their established economic machine. Their choice was not to change themselves and Japan to prosper in the new environments, but instead to maintain the status quo. In 1980s, Japan also faced a major economic challenge to reduce its heavy dependence on exports. The government failed to do so, despite injecting so much cash to maintain or revive the economy by issuing an unprecedented amount of government bonds. Japan has become more and more outdated, with some exception of globalized firms such as Toyota. Economic growth has stalled, and the population started to shrink with mounted national debt.
Of course the Japanese people had noticed that LDP was outdated, but we did not have suitable alternatives. Other parties were small and thought themselves just good enough to criticize LDP’s policies rather than to construct and implement new values. So people hoped LDP to change itself and waited.
But as time passed, LDP failed to transform and the population became even more dissatisfied. Koizumi appeared to foster internal revolution, but he did not change the system. The final disillusion for voters was that they found LDP had no more leadership within the party; they changed their party leader three times within three years. So after the long waiting period, they decided to say NO to LDP. By this time, DP had grown to the degree that people felt they could hopefully rely on them.
After 50 years, Japan has arrived to an era without LDP’s rule. But nobody is certain if the political picture moves to British or US system where two dominant parties are competing, or remains unstable with no majority like other European nations.
In short, Japan has just started to change itself, 20 years later than it should have, while things turned from bad to worse. Japan comes of age, as Murakami says. The symptoms are clear. The remedy process will take long. But it appears that hardly any corrective policy has been developed. Even the vision for recovery has not been put forth. Therefore, nobody knows what surgery will take place and whether the operation will be successful. The new surgeons’ skills are uncertain.
Having to rely on DP surgeons’ hands under these circumstances, Japanese people are anxious rather than melancholic.