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Chance for a new Japan?

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If they do not lose their nerve, Japanese citizens will elect a new government on 30 August.  Could this be the start of something new? 

It is important to remember that Japan did not choose to be a democracy.  The political freedom of Japanese citizens was foisted upon them by their American occupiers after the war.  Japan has always been an authoritarian society with a strong sense of hierarchy, duty and loyalty.  Even today, voter turnout is low, especially among the younger generations, who have the most to gain from change.  Part of the conservatism of an ageing society like Japan comes from the older people who want to hang on to their privileges.

Japan is fundamentally different from Western countries like the French who have had revolutions for their freedom, or the Americans whose country is built on the belief of freedom.  It is also different from other Asian countries like Korea, the Philippines or Taiwan which also struggled for democracy.  It is even different from China where there have been struggles for political freedom and where today the government keeps a close tab on public opinion, and is afraid of being too far out of line with public opinion.  For most of its history, public opinion has been irrelevant in the governance of Japan.

So if the Democratic Party of Japan replaces the Liberal Democratic Party which has been in virtual continuous power for 54 years, it could or should be a revolution.  Japan has been basically a one-party state since the end of World War 2.  While China is also a one party state, it has undergone greater political changes than Japan, as China has known the periods of Mao, Deng, Jiang and now Hu during which policy has changed dramatically.

In these circumstances, one could hope for a new era, a new vision and a new Japan.  We have seen such new chapters in countries’ histories with Tony Blair in the UK and Barack Obama in the US.  Could we see this in Japan? 

But what are Japan’s great policy challenges in the period ahead?

First, a fragile recovery on the back of exports to China came crashing down with the global financial crisis.  Now Japan is in deep recession, unemployment is rising, hidden unemployment is massive, suicides are approaching record levels and deflation has started again, notwithstanding a recent bounce back in industrial production.  As usual, the government has thrown lots of money at the crisis, storing up even greater problems for the future.  The macroeconomic follies of recent decades, which resulted in a massive public debt, need to be reversed. 

Second, the current financial crisis has demonstrated that Japan will have to give up its old economic model of exporting manufacturing products to the US and Europe.  After years of living off global demand, it needs to contribute to world demand.  And moreover, it needs to become a dynamic services-oriented economy.  Opening up its economy to globalization and deregulating the domestic economy are what is needed.  But this is a tired old debate dating back at least as far as the Maekawa report which was dead on arrival in 1986.  Still very little reform has happened.

Third, the government needs to re-build trust and confidence in the Japanese society, among consumers, savers, investors, workers, jobseekers and retirees.

Fourth, over the longer term, it needs to build a real community with its Asian neighbours.  This means being honest about its history.  It also means opening up its economy, including to migration.

Fifth, the rise of China, which will overtake Japan in economic size in 2010, means that a stronger relationship with the US is necessary.  And this means being a very useful political and economic partner for the US, especially now that the US is in a position of total embrace with China.

Do the election campaign debates give us any cause for hope?

The DPJ is clearly leading the policy debate through its recently released policy manifesto.  It is already working in tandem with the Socialist Party which it may need as a coalition partner.  Thankfully, it is softening its tone towards the US regarding the military alliance and bases.  This new found pragmatism shows that it is seriously preparing for government.  They even call for a free trade agreement with the US.  With its East Asian neighbours, it seems like business as usual, with no new initiatives.  Populism is at the heart of its domestic program -- child care handouts, support for education, health and pension reform, support for SMEs.  It is not clear how any of this will be funded.  They plan a cut in carbon emissions with a cap and trade system.

Lastly, and most importantly, the DPJ plans to wrest power from the bureaucrats, by shifting decision making to ministers.  This will be hard, but for the health of Japanese democracy, it is perhaps the most important initiative.

The LDP is now fighting back with its own promises to boost household incomes, revive the struggling economy and also provide child support, although Prime Minister Aso has vowed to move away from structural reform which is blamed for widening income disparities.  The LDP is resorting to scare tactics in this time of crisis. 

In short, there is no great inspiration here.  This is not surprising in that the DPJ is a mixed bag of diverse elements, including LDP defectors.  And the LDP has lost its way, and is better at infighting than fighting the DPJ. 

But what is inspirational is the fact that the DPJ has laid out a policy program.  It is widely seen as a credible alternative to the LPD.  So Japan may well have a new government.  This could be the beginning of real two party democracy in Japan.