Author: Peter Drysdale, East Asia Forum
As the official election campaign rolled out last week, the media are still trying to get a handle on what the upcoming Japanese election is all about. This is ‘the election Japan didn’t need to have’ or the election ‘that’s not about anything in particular’, except securing Prime Minister Abe’s and the Liberal Democratic Party (LDP) survival in the longer term. It is also a window of opportunity — ‘the now’s our chance’ opportunity — for the ruling LDP to entrench its current power in the Japanese Lower House for an extra couple of years. The paradox is that, unless democratic institutions and leadership totally fail the Japanese electorate, Abe and his cabinet are on a hiding to nowhere in the medium to longer term but appear to be assured of a massive election victory on 14 December.
The polls of all the major Japanese newspapers a few days ago suggest that the LDP will win a 300 seat or more majority in the Lower House of the Diet next weekend. Currently they hold 294 seats after the loss of confidence in the Democratic Party of Japan (DPJ) government two years ago. Under the Japanese constitution, a majority of this size would give the government the power to override rejection of legislation in the House of Councillors and enormous power to prosecute its agenda, perhaps even without the support of its coalition partner the centrist New Komeito. On most issues, including the economic agenda on which Abe has declared this unscheduled election to be a referendum, the Japanese government already has the numbers. So why is the Abe government going to the polls when it doesn’t really need to?
Should the LDP secure an increased majority in the Diet next Sunday, it won’t be because Abe and his cabinet are becoming more popular. Abe’s approval ratings continue to slide. Abe had a massive 70 per cent approval rate at the beginning of his government, largely founded on the promise of delivering a way out of Japan’s economic stagnation via ‘Abenomics’. The intervening two years has seen his approval steadily drop below 50 per cent with the latest Yomiuri newspaper poll registering a 42 per cent approval rating, a mere 3 percentage points above his disapproval rating of 39 per cent.
This will get worse for quite a while before it gets better. The next scheduled Japanese election was for December 2016. With confidence beginning to fracture in the delivery of Abe’s economic reform program and uncertainties about where Japan is being led politically, the hard political calculation was that it was better to quit and try again while you were still ahead than to hope for a turnaround in the next two years. With the opposition still in disarray and the DPJ’s uncharismatic leader, the former trade minister Banri Kaieda, unable to gain traction or give direction, at this stage the Japanese electorate has nowhere to go except stick with the ruling coalition or stay away from the polls altogether — which they are expected to do in even larger numbers than they did last time (when the voter turnout was as low as 59 per cent).
This remains a risky time for Japan’s economic experiment. The economy has technically fallen back into recession, with a second quarter’s drop in GDP. As predicted, with the disappointing GDP results in November, Abe moved swiftly to cut and run on implementing the promised second-round lift in consumption tax next year. In calling the election he announced the postponement of the consumption tax hike (one of the pillars of fiscal consolidation), contrary to official advice, and the market responded sharply and positively. Yet in postponing the consumption tax hike, he promised to lift it in 2017, no matter what. With the economy still so weak, this is not the time for fiscal austerity. Bank of Japan Governor Haruhiko Kuroda is still pumping cash into the economy to lift inflation but, at 0.9 per cent, inflation is less than half the target rate. And structural reform — the third arrow of Abenomics and where all the action has to be — is thus far virtually an entirely empty set. Structural reform will make or break the Abenomics strategy and the longer term health of the Japanese economy. There are no quick or single fixes in sight. On the face of it at least a decisive electoral victory this week will give Abe the clout to deliver the third arrow.
Yet hardened observers, like Rick Katz at The Oriental Economist are not quite convinced. If there were ever a time when a Prime Minister would have the clout to override special interests, this is it. But, so far, Katz says, ‘Abe has shown no inclination to do so beyond lip service. While a big victory could change things, our gut says it won’t’. As Corey Wallace points out, nothing short of a reversal in the fall in real wages and the collapse in recovery over which Abe has presided, will lift his falling approval ratings over time. This will make him a nervous politician, exposed to more criticism from within and liable to resort to the old political games. If Abe doesn’t act immediately on structural reform, including the emblematic Trans Pacific Partnership (TPP) negotiations, his leadership is likely to flounder.
As Ben Ascione reminds us in this week’s lead essay, this election is not all about economics. He cites the plan to restart nuclear power plants and collective self-defence as areas which will continue to erode Abe’s electoral base.
Some would cast it as the election ‘about everything under the re-rising sun’ not about ‘nothing very much at all’. While Abe’s rhetoric is heavily focused on delivering Japan from economic stagnation, his political heart is in restoring Japan’s honour and place of influence in the international order. There is an understandable longing for this among reasonable people in Japan but most are realistic enough to acknowledge that, in its more extreme expression on the right, it is both a forlorn hope and risky course that cuts across a strongly pacifist instinct which is the legacy of a disastrous war as well as the reality of Japan’s geo-economic and political circumstance today. The psycho-political drama that is playing out around the election over the ‘comfort women issue’ and the assault of the right on the centrist press — in the war against the Asahi Shimbun, Japan’s second largest newspaper — is part of the background atmospherics of this tussle between the right and the centre that are difficult for all but the most seasoned professionals outside Japan to judge the long term impact, however sure it is that the right will take the prize next Sunday.
Peter Drysdale is Editor of the East Asia Forum.