Friday, September 4, 2009

Japan's Great Electoral Earthquake

An unprecedented Earthquake hit Japan on Sunday, August 30.

In a stunning blow to Japan's ruling Liberal Democratic Party, the little-known
Democratic Party of Japan swept to power, winning 308 out of 480 seats in the
lower house of the Japanese Diet (Parliament).

Americans may not realize how stunning a change this is. Founded in 1996,
the DPJ had been regarded as a mildly left-wing group of younger former
Liberal Democratic members of Parliament and disaffected Socialists - more of
a loose faction than a true political party.

Arrayed against them was Japan's mighty Liberal Democratic Party.
One of the longest-ruling political parties on earth, it had enjoyed almost
unbroken single-party rule in the world's second-largest economy since
1955. Only a short-lived coalition government in 1993 interrupted that
streak - and the electoral "defects" that had permitted this momentary lapse
were quickly rectified the following year.

Another advantage enjoyed by the LDP was its unusual symbiotic relationship
with Japan's vaunted civil service. Unlike most other democracies, the
Japanese Civil Service didn't just execute policy - for the most part it
created policy, issuing "guidance" to the elected Government on just how
legislation should be negotiated through Parliament and how they intended
to carry it out.

Carefully selected from Japan's most elite universities, many with
advanced degrees from the West's most elite institutions, they were a true
Mandarinate - elite technocrats wisely guiding the less-experienced
elected government in the name of the Greater Good.

And the influence of the mandarinate didn't just stop there. Its influence
also extended to Japan Inc. - the interlocking directorates of Japan's largest
corporations and financial institutions, whose boards and executive suites were
filled with civil-service alumni.

With all of these built-in institutional advantages, the LDP should not have lost.

But underneath the surface, a tectonic shift was brewing.

The Japanese economy had never recovered from the bursting of its
"property bubble" twenty years ago. Enormous budget deficits -
currently running at an astounding 170% of nominal GDP , had failed to
stimulate the economy. And although inflation and interest rates were low,
they were largely held in check by high taxes and pervasive regulation.

And the result of all this? Not economic disaster, but a slow, stagnating decline.
Little opportunity for Japan's college graduates in an economy that
was once the envy of the world. A population both aging in absolute terms
and declining in absolute numbers. Large-scale layoffs in a society that once
prided itself on "lifetime employment".

And most shockingly, a noticeable decline in innovation and technological
advancement when compared with other advanced industrial nations.

In any other society, that wouldn't have led to just electoral change -
it might have led to revolution. But not in Japan.

For the Japanese are a patient people. And steeped in both Confucian ethic
and an emphasis on harmony and consensus, they stoically endured both
the bungling of the LDP and the clumsiness of the bureaucracy for almost
twenty years. But then, the dam broke.

First, there was a financial scandal in the award of public construction
contracts. Not one implicated politician or bureaucrat lost his position
or felt obliged to resign. Then, the Social Welfare Ministry "lost"
the pension records of some 53 million retired workers, causing huge
problems. No one took the blame for that either. And finally, the people
noticed that while their standards of living had either remained static
or declined, those of their corporate, political or bureaucratic masters
had not. That was the final straw.

In response, the LDP began to shuffle the deck, including changing
Prime Ministers three times in one year - a move that led some in the news
media to begin comparing Japan to Italy - that other paragon of political stability.

"Government of the Month" became a staple of humorists.

So it wasn't surprising that when the earthquake came, it struck with
devastating force. LDP Prime Minister Taro Aso not only led his party to defeat
but lost his "safe" lower house seat in the process. So did the Finance Minister.
So did the Minister of Public Works. So did the Minister of Energy.
So indeed did all but two current cabinet members. And in almost all
cases, they were replaced by much younger unknowns.

This wasn't just a change of political parties - this was a change of regime.

To be sure, Prime Minister Aso did the right thing. He not only resigned
as Prime Minister but from the party leadership as well, taking full
responsibility for the unprecedented debacle. Incoming Prime
Minister-designate Yukio Hatoyama - scion of a political family,
whose grandfather was Japan's first LDP Prime Minister -
graciously accepted victory, making all the right comments that while change
would happen, much that the Japanese people valued would remain the same.

As he and the DPJ begin the task of forming a government, we at
The Thinking Nationalist will be watching. In a further post, we'll take a
look at some of the unique challenges he and his party will face.

But there are lessons that can be drawn from this episode.

First Lesson: Rotation in Office is Good. Politicians become entrenched
by becoming representatives of favor-seeking special interests instead of
representatives of a constituency. Parliamentary systems can make
entrenchment even easier with safe seats and assigned constituencies.
While the LDP became famous for moving its key players from seat to seat
so as to deflect challenges, that's not what I mean by "rotation in office".

I'm talking about the kind of rotation in office that comes from term limits.

Second Lesson: If Rotation in Office is good, Rotation in Power is even better.
Periodic peaceful transitions of power between major parties is a good thing.
Every so often, major political parties anywhere needs to spend some time
in opposition - to sharpen their message, re-define their policies, and to
above all permit new people the opportunity to participate.

Sharpened messages, new ideas, and new faces are the only sure way back to power.

Third Lesson: In democracies, bureaucracies work for the elected officials,
not the other way around. No matter how well-intentioned, "legislative capture"
by an unelected civil service always eventually ends badly - for the
"captured" legislature or politicians. Mr. Hatoyama's innovative proposal to
slot scores of Lower House members into policy-making positions in
the various ministries will help restore some long-overdue oversight
and accountability.

Finally, politicians everywhere need to remember that in a democracy, there
is no such thing as a permanent franchise in office. Rather, what you have is
a revocable tenancy - that can very easily be terminated by the voters, for any
or no reason. Do a good job for the folks who hired you - the voters -
and you may get to keep your job. But if you screw up, you'll be replaced -

Come to think about it, that's about the only guarantee there is in politics.

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