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Koizumi's Gamble and Its Consequences

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Koizumi's Gamble and Its Consequences KOIZUMI’S GAMBLE AND ITS CONSEQUENCES CENTER ON JAPANESE ECONOMY AND BUSINESS SEPTEMBER 20, 2005 When Japanese Prime Minister Junichiro Koizumi called for snap elections to occur in September 2005 to push forward his postal privatization agenda, the opposition, the public and even some of his colleagues were quick to dismiss his so-called irra- tional move. With only a year left until his retirement, why would the lame-duck Prime Minister hustle this much to shake up the entire political system just for one policy agenda? With resounding results, Koizumi accomplished something many in Japan and overseas political observers didn’t think he could do: he managed to usher in a new political era for his Liberal Democratic Party and the Japanese political system through this historic election. With details for the privatization of the postal system still very unclear, no one knows how this vast pool of funds will affect the financial system. Will the release of government control over postal savings and life insurance deposits shake up the stock and bond markets? How and why did postal privatization become Koizumi’s ideological agenda? What does this election mean for the LDP? What mistakes did the opposition party make? To shed some light on the current political landscape in Japan, Columbia University Burgess Professor of Political Science Gerald Curtis spoke to a packed audience on September 20, 2005. He was joined by David Weinstein, Carl S. Shoup Professor of Japanese Economy and Associate Director for Research at the Center on Japanese Economy and Business (CJEB) and Hugh Patrick, Director, CJEB. This report highlights Professor Curtis’ speech and following discussions with audience members. The program was cosponsored by the Weatherhead East Asian Institute of Columbia University. For the students in the audi- House when a large number ence, in case some of you are of LDP members decided to wondering how Gerry became vote against it. Prime Minister so eminent, I need only remind Junichiro Koizumi immediately you that he received his Ph.D. dissolved the Lower House, from Columbia and has stayed saying that he wanted the here ever since. So, a word to public to indicate whether it the wise is sufficient. supported his policy on the DAVID WEINSTEIN In a fascinating turn of reform of the postal system or Carl S. Shoup Professor of the Japanese Economy, Columbia events, Japanese politics seems agreed with those who were Japanese politics University; Associate Director for to be moving more toward opposed to it. seems to be moving Research, Center on Japanese the battle of ideas and, most Koizumi’s strategy was to toward the Economy and Business, recently, toward the battle of frame the election as a referen- battle of ideas. Columbia Business School factions. But rather than listen dum on postal system reform. —David Weinstein am honored to be here to to my take on it, I’ll turn the He drove all of the LDP mem- I share the podium with such floor over to Gerry. bers who had voted against his distinguished speakers and bill in the Lower House out of colleagues. Gerry Curtis is a the party and ran new candi- person who does not need an dates against them, including introduction, but in case there several high-profile women. is someone in the audience The media quickly labeled who hasn’t been paying atten- these new candidates the tion to Japan for the last four “assassins,” thus bringing a decades, I will say a few words. sense of high drama to the Gerry is the most eminent election and getting the public political scientist working on GERALD CURTIS excited about it. The result was Japan. His book Election Cam- Burgess Professor of Political a nearly 8-percentage spike Science, Columbia University paigning Japanese Style became upward in the voting rate. a best-seller in Japan. I think am delighted to see so many Koizumi managed to portray one signature feature of Gerry’s I people here today. This is a the LDP, which for the previous career is that he not only teaches really big turnout for a lecture four years had resisted much Westerners so much about about a Japanese election, but of his program, as the party of Japanese politics, but Japanese this was truly one of the most reform, and the Democratic political scientists also learn an interesting, entertaining, and Party (DPJ), which had been enormous amount from him. important elections in Japanese founded several years earlier His book The Japanese history. to pursue a reform agenda, as Way of Politics won the Ohira The trigger for the election a party opposed to change. Memorial Prize, and last year was the Diet’s rejection of a There is little evidence that Gerry was given the Award of government bill to privatize the public knew what to make the Rising Sun Gold and Silver Japan’s postal system. The bill of the details of the postal Star by the Emperor. In addi- only barely passed the Lower reform bill. What attracted them tion, Gerry writes a column for House when nearly forty was the courage of a Prime several Japanese newspapers Liberal Democratic Party (LDP) Minister who was willing to risk and serves as an adviser to members voted against it. It losing power rather than give Newsweek magazine. was defeated in the Upper up a policy that he believed 2 Koizumi’s Gamble and Its Consequences was essential for Japan’s eco- To explain a little about the Yohei Kono, who had split nomic revitalization. Koizumi results, the first point to stress from the LDP to form the New convinced the voters that he is that this election was not Liberal Club, enjoyed a similar had the conviction of his beliefs won by the LDP. It was won by outpouring of public support. and would rather leave office Prime Minister Koizumi; nearly Every decade or so, a politician than betray those beliefs. 300 LDP candidates rode into appears who seems to capture His strategy succeeded bril- office on his broad coattails. the imagination of the Japanese liantly. A prime minister, who Koizumi is in a league of his public. until just a few weeks earlier own when it comes to political The difference this time is looked as though his popularity skill and media savvy. He has that the object of the boom was was ebbing and whose ability often said that he would the Prime Minister, rather than to survive in office until the destroy the LDP if it did not an opposition party leader and, end of his term as LDP President support reform, but in fact he most importantly, that it was in September 2006 was being is not destroying it but saving the first such boom to occur in publicly questioned, now sud- it from itself. the context of Japan’s predomi- denly enjoyed a huge upswing Koizumi is often compared nantly single-member district in popularity. His party swept to Ronald Reagan and Margaret system. Such a system magni- the election, increasing its rep- Thatcher because of his emphasis fies the effects of a leader resentation in the 480-member on shrinking the government’s boom, sweeping members of Lower House by 84 seats for a role in the economy, but the the leader’s party to victory total of 296 seats. Together with more apt comparison is to Tony across the country. its coalition partner, the Komeito, Blair. Reagan and Thatcher The size of the LDP victory which won 31 seats, it controls succeeded in convincing the was unexpected, even to the two-thirds of the Lower House. public to support positions party’s leaders. In Tokyo, for That means that it has the num- long identified with their par- example, it won every single- bers to pass legislation defeated ties. Koizumi, like Blair, forced member district seat except for in the Upper House. his own party to embrace poli- one and won so many seats in The opposition DPJ suffered cies they had long resisted and the proportional representation a humiliating defeat. It won then got the public to support contest that it did not have The first point to only 113 seats, a loss of 64. Of the party because of its new enough candidates to fill all the stance. Koizumi has not yet stress is that this the 31 purged LDP incumbents, seats it won, causing it to forfeit most of whom ran as inde- succeeded in creating a “New one seat to the Socialists. election was not pendents, only 15 won. They LDP” in the way Blair created Koizumi’s appeal since he won by the LDP. also remain outside the party New Labour, but he has created was first elected Prime Minister It was won by and isolated. With the adoption the possibility that he will do so. in 2001 is rooted in his innate Prime Minister of a predominantly single- The phenomenon of a optimism. Japanese politicians Koizumi. member district system a “Koizumi boom” driving up tend to warn about how bad decade ago, small parties such public support for his party is things will get if people don’t —Gerald Curtis as the once powerful Socialist not without precedent. A little try hard to avoid calamity. Party (renamed the Social more than a decade ago, there When times are good, people Democratic Party) and the was a Hosokawa boom that may be responsive to a politi- Communist Party have fared propelled Morihiro Hosokawa cian who warns that good poorly. Neither was able to into the Prime Minister’s office.
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