Raw Japan

Slices of Japanese business, politics and life

Historic win in Japan. Now what?

August 31, 2009

Historic is usually a word that makes my skin crawl when I see it in the news. Journalists are prone to overuse it, so when I saw it in our election stories I had to stop myself deleting it — because this election truly is historic.JAPAN-ELECTION

The Liberal Democratic Party had never lost an election since its founding in 1955. Even when it lost power for a few months in 1993/94, it was because of LDP lawmakers defecting rather than an election loss.

So the Democratic Party, under prime minister-elect Yukio Hatoyama, has a huge mandate. What will he do with it?

It’s clear that the last two elections were votes for a change to the old system where the ruling LDP, big business and bureaucrats ruled the place. Remember the 2005 LDP landslide was led by Junichiro Koizumi running on the destruction of his own party’s pork-barrel history.

The question is whether voters also rejected deregulation in the wake of the financial crisis and slumping exports that put large numbers of unprotected contract workers out of work.

The Yomiuri newspaper, Japan’s biggest seller, certainly subscribed to that view in its editorial on Monday. Along with the undisputed argument that voters were disgusted with the LDP’s failures, it said the defeat “was brought about by the collapse of its structural reforms that went too far”.

election-seats

Hatoyama certainly campaigned on that basis, raising eyebrows as he attacked “unrestrained market fundamentalism” in a magazine article that was subsequently translated and published in the New York Times.

Attacking markets is not unusual after the financial crisis, particularly in Europe, but Japan is hardly a carbon copy of U.S. free-wheeling capitalism. So it was interesting to see Hatoyama backpedalling a bit even as the votes were being counted and the reality of government set in.

“We are not saying that the market principles are all bad,” Japan’s new leader said. “But the current economic situation is one where there need to be corrections in areas where reform went too far.”

So the Democrats have cleverly left themselves a lot of room to move Japan in whatever direction they want — from strengthening a threadbare social safety net to ending Japan’s heavy reliance on exports.

Whatever they do, they must be more savvy in their marketing than their predecessors.

For the LDP, the disgust of voters was so ingrained that even a giveaway of around $130 cash to each voter as part of economic stimulus efforts earned ridicule rather than gratitude.

Photo credit: REUTERS/Kim Kyung-Hoon

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