Webcast Recap

Richard Katz, editor-in-chief, The Oriental Economist; Ko Maeda, assistant professor, University of North Texas; Daniel Sneider, associate director for research at Stanford University's Walter H. Shorenstein Asia-Pacific Research Center, Stanford University.

A change in government may be coming to Japan. Polls show that Prime Minister Aso Taro is deeply unpopular among Japanese voters, and the opposition Democratic Party of Japan (DPJ) has won impressive victories in the recent Tokyo municipal elections. To stave off a revolt within his own party and his own possible replacement as party leader, Aso dissolved the House of Representatives, Japan's more powerful lower house, on 21 July. The scene is now set for an August 30 election, and if the Liberal Democratic Party's disastrous run continues, the DPJ's campaign slogan of "regime change" (seiken koutai) seems likely to be an accurate prediction.

Until now, analysis of the major opposition party has usually focused on its perceived lack of unity. Because of these divisions, the party is often said to lack concrete policy. In addition, the presence of former Socialist Party members within the DPJ is often viewed as a sign that a DPJ government may be a source of friction between Japan and the United States. On July 21, the Asia Program held an event to discuss whether these and other assumptions are true, as well as to assess the chances of "regime change" in August.

Ko Maeda presented numerous statistical studies to show that a 1994 change in the Japanese electoral system from a multi-member district system to one largely based on single member districts has meant a shift from candidate-focused elections to those where the image and policies of the party are more important. There is also clearly an ongoing shift towards a two-party system. Also, because elections are a series of "winner takes all" contests across the nation, subtle shifts in voting patterns can result in large electoral victories. This occurred in 2005, when the LDP increased its majority in the House dramatically with only a three-percent swing towards the party.

While Maeda was careful not to make any predictions, he did warn against viewing a DPJ victory this summer as a foregone conclusion. Maeda showed that the DPJ needs, on average, a swing of at least six percent to be able to form a coalition with other parties after the election, and an even larger swing to hold a simple majority in the lower house. While many Japanese voters are clearly dissatisfied with "politics as usual" as offered by the LDP, such large shifts are rare in elections anywhere. In order to convince the public to vote for the DPJ, Maeda suggested that the party needs to run a party-centered campaign, and to avoid letting individual candidates dominate the political discourse.

A DPJ victory might therefore prove difficult, if the party is indeed an incoherent collection of groups with competing agendas. However, Daniel Sneider refutes this commonly-held assumption. Sneider, who earlier this year interviewed several influential figures within the DPJ, maintains that, on foreign policy at least, most DPJ members fall within a broad internationalist consensus. The party as a whole advocates closer ties to Asia, increased commitments to multilateral solutions to international problems, and a Japan that can make foreign policy decisions without consistently considering what the reaction from the United States might be.

Sneider does not believe, however, that a DPJ government would necessarily mean more friction in U.S.-Japan relations, noting instead that there is room for significant convergence with the Obama administration on issues such as nuclear disarmament and multinational peacekeeping operations. Also, Sneider maintained that the left wing of the party, which is made up of former Socialist Party members, is neither as influential nor as antagonistic towards the United States as many commentators have claimed. Finally, Sneider noted that the DPJ is less reluctant than the LDP to work with Asian neighbors to solve longstanding issues related to Japan's perceived inability to atone for its wartime atrocities. The resolution of these problems would enhance regional stability and would therefore be in the interests of the United States. In summary, Sneider noted that Japan under the DPJ would be a "Japan that can say maybe." The U.S.-Japan alliance would still be important, and the relationship between the two nations would be cooperative, but not to the extent that Japan would always tailor its policies to suit American interests.

However, it is unlikely that the election will be contested on the issue of foreign policy. Japan has significant economic problems that are likely to be the focus of the campaign in August. Richard Katz outlined those problems before assessing the DPJ's ability to deal with them. From 2001 the LDP focused on increasing exports to drive economic growth while neglecting domestic consumption, which barely rose over the same period. This policy proved to be mistaken when the slump in global demand wiped out 75 percent of the gains in GDP that Japan had made since the beginning of the decade. Further, low Japanese savings rates indicate that if money is available, Japanese people will spend it, making a stimulus policy built on increasing household spending all the more feasible.

Katz therefore agrees, in general, with the DPJ's policy of targeting household income shortfalls via tax cuts and transfer payments. Many of the measures the DPJ proposes would be permanent and shift the economy from export dependence to consumer-led growth. The party also believes that increased household incomes and new child allowances would raise the birthrate, vital in Japan's rapidly-aging society. However, the DPJ's two year ¥21 trillion plan would equate to 4 percent of GDP, and the DPJ has remained silent on how it intends to finance this policy, which will likely involve raising consumption taxes and deficit spending. Worse, according to Katz, the DPJ lacks a clear structural reform policy and is even willing to take some retrograde steps, like offering subsidies to small and uncompetitive rural farmers, and restoring job protection at the expense of labor mobility. Katz believes that neither an extreme version of neoliberal structural reform, as advocated by some in the LDP, nor a return to the bad old days of export substitution policies is the answer, and argues that the DPJ should focus on cutting wasteful spending in the bureaucracy while stimulating domestic consumption.

Drafted by Bryce Wakefield, Asia Program Associate.
Robert M. Hathaway, Asia Program Director. Ph: (202) 691-4020