November 22, 2011

Can Noda Survive? Ko Mishima

Two months have passed since Prime Minister Yoshihiko Noda’s inauguration. Despite his initial obscurity among Japanese voters, Noda has skillfully built up popular support by emphasizing his humble stance and honest personality and has managed to launch his cabinet safely. However, the real test awaits him ahead. Japan faces an overwhelming array of problems that include reconstruction in the earthquake-hit area, the nuclear power plant crisis, and the two- decade-long recession. There is a good chance that Noda will become another short-lived Japanese premier. Realistically speaking, Noda’s future depends on his handling of four hurdles. If he fails to clear any one of them, his cabinet will become a lame duck immediately. The first hurdle is the weak unity of his Democratic Party of Japan (DPJ). Born as an amalgamation of diverse political groups, the party has traditionally lacked organizational cohesiveness. Earlier, the bigger purpose of ending the dominance of the Liberal Democratic Party (LDP) was the organizational glue, but this is no longer the case. The deepest cleavage concerns Ichiro Ozawa, the party’s kingpin. The preceding prime minister, Naoto Kan, took an unambiguously anti-Ozawa stance, letting the collision between the pro-Ozawa and anti-Ozawa camps undermine his effectiveness in policymaking. Indeed, Kan could not take a clear-cut position over internally divisive issues, such as social welfare, public works, the Trans-Pacific Partnership (TPP), and U.S. bases in Okinawa, because he feared that the pro-Ozawa camp might use them in power struggles. In May, the pro-Ozawa camp even threatened to pass a no- confidence vote in the lower house by conspiring with the LDP, which ultimately led Kan to decide to step down. Noda should stand aloof from his party’s split over Ozawa because it derives mainly from personal factors, not differing policy positions. In fact, the anti-Ozawa camp includes a wide spectrum of political views that ranges from conservative hawks like Seiji Maehara to former socialists like Yoshito Sengoku. Many of Ozawa’s supporters are new-face parliamentarians whose ideological position is unknown. It is true that the battle between the two camps occasionally became entangled with policymaking, but its core concerned personal antagonism as in the LDP’s old factional politics. Like other great politicians, Ozawa has merits and demerits, and it is counterproductive for Noda to try to eliminate his influence totally. This is especially the case because Ozawa’s ability for intraparty maneuver is already constrained by his trial for illegal political funds. If necessary, Noda should not hesitate to borrow Ozawa’s help in such vital areas as interparty negotiations and electoral strategies. For now, Noda has been successful in reducing his party’s internal tensions by distributing cabinet and party posts evenly across the pro-Ozawa and anti- Ozawa camps—most tellingly, he appointed Azuma Koshiishi, an Ozawa ally, as the party’s secretary-general while appointing Maehara as the party’s policy chief. The second hurdle is the “Twisted Diet,” wherein opposition parties hold a majority in the upper house and therefore have the ability to veto bills sponsored by Noda. The current constitutional design that endows almost equal power to both chambers is obviously irrational. Its origin can be traced back to the prewar constitution promulgated in 1889, which aimed to restrain the popularly elected lower house by giving equal power to the appointed upper house. In the constitutional revision of 1945–1947, without paying due attention to General Douglas MacArthur and his officials’ recommendation for a unicameral system, Japanese leaders uncritically chose to retain the old bicameral system just by turning the upper house into an popularly elected body. Consequently, a major fault of the prewar constitution—the fragmentation of political authority that damages the effectiveness of top leadership—still lingers. Today, many Japanese people seem to be supportive of altering the constitutional stipulation.1 But given the practical infeasibility of

1 According to a Yomiuri poll in September 2011, 26 percent of the respondents preferred introduction of a new unicameral system and 38 percent preferred reduction of the upper house’s authority under the bicameral system; only 30 percent preferred the status quo. “Kenpo Giron ni Shinsai constitutional revision anytime soon, Noda’s only option is to persuade the LDP to vote for his bills. This job is extremely difficult because the LDP is so anxious to return to power that it does not hesitate to resort to obstructionist tactics with a view to forcing Noda to dissolve the lower house. Ultimately, Noda can escape this predicament only through visible policy achievements and a rise in his approval rating among the Japanese public. As former prime minister Junichiro Koizumi showed, strong popular support is the only weapon to break the impasse caused by the parliamentarians’ myopic behavior. Koizumi was a resolute economic reformer. His reform programs were seen as too radical and were vehemently opposed by parliamentarians within and without his LDP. But he successfully kept a higher approval rating than any other prime minister by his ingenious media strategy. Ultimately, the strong popular backing enabled him to push through controversial reform programs. The third hurdle is bureaucratic resistance. When the DPJ took the helm of government two year ago, it correctly put curtailment of bureaucratic power at the top of its agenda. Helped by the traditional absence of clear rules about the division of labor between politicians and administrators, Japanese bureaucrats often intrude into the domain that would be reserved for politicians in other democracies and exercise undue influence over policymaking. Further, any serious policy reform will encounter strong opposition from the bureaucracy because existing policy orders are deeply intertwined with its organizational interests. Thus, curbing bureaucratic strength is essential to improving Japanese democracy and advancing reform programs. However, this job is difficult due to the bureaucracy’s monopoly on policy information and expertise. In Japan, think tanks are underdeveloped, and academia tends to avoid involvement in partisan politics. As a result, the bureaucracy often becomes the only source of advice for politicians. The challenge for Japanese leaders is to make good use of bureaucrats’ information and expertise while avoiding being brainwashed by them. This test is never easy to pass; actually, Noda’s predecessors, Yukio Hatoyama and Naoto Kan, failed miserably. Fearful of their manipulation, Hatoyama distanced himself too much from bureaucrats, filling his policymaking with elementary errors, as his mishandling of the problem of U.S. bases in Okinawa vividly demonstrated. Learning from Hatoyama’s mistake, Kan took a cooperative approach to the bureaucracy, at least until the nuclear power plant crisis in March. But this also never paid off, as his blunder on the consumption tax indicated. Kan, an economic policy novice, was readily coopted by the Ministry of Finance (MOF) and prematurely announced his intention to raise the consumption tax, bringing a major defeat to his party in the last upper house election. Noda appears to be taking a strategy similar to Kan’s; indeed, some analysts find the MOF’s hands in his plan to double the consumption tax by 2015. Probably, the best method for controlling the bureaucracy would be to use reform-minded bureaucrats. Today, it is not so difficult to find reformers even in the conservative Japanese bureaucracy. Noda can give them special appointments to help him. Their expertise and insider knowledge will make them his reliable allies. The fourth hurdle is to draw up a blueprint for Japan’s revival. Noda emphasizes the need for tax increases to recover fiscal balance, but he will be able to get the Japanese people to swallow such a bitter pill only with a credible promise for a brighter future. The reconstruction of the earthquake-ravaged Tohoku region should be planned and undertaken as a part of the entire nation’s rejuvenation. In spite of numerous rounds of discussions, Japanese leaders still fail to agree on new growth frontiers for the Japanese economy. Admittedly, reformers such as Koizumi implemented various reform programs, but those programs basically aimed to slow down the decline of export-oriented manufacturing industries and were merely an extension of Japan’s traditional growth strategy. But with the rise of emerging economies like China, export-oriented manufacturing cannot act as the Japanese economy’s locomotive any longer. Of course, those industries will continue to constitute an important part of the Japanese economy in the future, but the low wages and technological improvements of their competitors in emerging economies will limit their growth prospects severely. To draw up an innovative vision for Japan’s revival, Noda should start with the assumption that the Japanese economy can recover growth only by deepening integration into the global economy. Noda rightly intends to make Japan join negotiations for the TPP. Contrary to the prevailing argument, the biggest benefit that Japan could expect from participation in the TPP or other free trade agreements does not concern the competitiveness of manufacturing firms. With dim growth prospects for the manufacturing industry, as noted above, Japan will need to find new sources of growth in such service industries as medical/health care, information/communication, and leisure/culture. But Japanese service industries are generally overregulated by the bureaucracy. Free trade agreements will force Japan to deregulate those industries and facilitate the entrance of foreign companies there. The greater competition that will ensue can considerably improve their productivity by not only raising static efficiency but also by causing creative destruction.

ga Kage; Honsha Yoron Chosa,” Yomiuri Shinbun, September 14, 2011.

If Noda can clear all four hurdles above, the DPJ will certainly regain momentum and solidify its ruling position. The party will probably be able to beat the LDP in the lower house election to be called within two years. Unfortunately, however, the chance of Noda’s success is not high. If he stumbles, Japanese politics are likely to see further deterioration. With the next election in sight, the LDP will not help the DPJ by agreeing to a grand coalition deal. The most likely scenario is that as the election approaches, political entrepreneurs who want to exploit the voters’ fundamental discontent with both DPJ and LDP will launch splinter parties. If they gain a certain level of popular support in the election, a tide toward party realignment could be unleashed. Surely, Japan needs party realignment. Both DPJ and LDP confusingly include a wide range of political opinions, so choosing between them makes little sense to Japanese voters. Yet, the process of party realignment will take time to complete. And Japanese politics will unavoidably continue to drift during the process. Ko Mishima is an assistant professor of political science at East Stroudsburg University of Pennsylvania. He can be reached at [email protected]. The Japan Chair invites other essays for the Platform. Please contact Eri Hirano at (202) 775-3144 or by e-mail at [email protected]. ______

Japan Chair Platform is published by the Office of the Japan Chair at the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). © 2011 by the Center for Strategic and International Studies. All rights reserved.