FOR a leader who’s displayed no shortage of tough-guy tendencies, why does Shinzo Abe act so timidly when it comes to Japan’s economy?
That might seem like a strange question to ask now, when the prime minister appears ready to call a dramatic snap election to win support for his economic policies. After an annualised 1.6% plunge in third-quarter growth, which has technically pushed Japan back into recession, Abe is hoping for a mandate to postpone a proposed sales-tax increase due next year.
I’ve argued previously that Japan’s tottering economy can’t afford another growth-killing tax bump; the last one, in April, caused the economy to contract by 7.3% in the second quarter. Scrapping the increase isn’t the issue. The question is why Abe doesn’t just step to the podium and announce the new policy, rather than distracting Japan’s bureaucracy and political establishment for the rest of 2014 with another election campaign.
With the opposition in disarray and turnout expected to be low, Abe’s Liberal Democratic Party is sure to sweep back into power again. But the prime minister’s approval ratings are sliding: 44% for his cabinet versus 52% a month ago. He’s not likely to win any larger mandate than he did when elected two years ago. So it’s hard to see how a vote would help him accelerate the structural reforms he laid out over the summer, most of which are still slowly making their way through the bureaucracy and various vetting panels.
“You ask yourself: What would be new about the ‘new Abenomics’ that wasn’t in the old one?” Gabriel Stein, director of asset management services at Oxford Economics, told me in Tokyo yesterday. “This sounds very much like a diversionary manoeuvre. It’s a waste of time and a waste of energy.”
In reality, the polls have less to do with the economy’s needs than the LDP’s. Japanese politicians strive desperately for consensus before embarking on any difficult reforms, favouring group harmony over the creative destruction favoured in the West.
Yet over the past two years, Abe has shown himself quite ready to ignore this tradition when it suits him. The prime minister doesn’t appear to care that most Japanese don’t want nuclear power plants restarted — he’s just plunging ahead. It doesn’t faze him that the public opposes secrecy laws that will put whistleblowers and journalists in jail. He’s reinterpreted the pacifist constitution so troops can be deployed abroad — a move that’s prompted massive protests and at least two self-immolation incidents. Even author Haruki Murakami is publicly denouncing efforts to whitewash Japan’s wartime aggression.
Banri Kaieda, head of the opposition Democratic Party of Japan, is obviously biased when he talks about Abe’s “authoritarian tendencies,” as he recently did in a speech in Washington. Yet Kaieda is right about one thing: Much of what Abe has accomplished thus far — for good or ill — falls outside his mandate to end deflation and boost living standards.
Why act like an autocratic Chinese leader on certain topics, and a Japanese one where it really matters? Abe is finding that vested interests and factions within his LDP are just too powerful for any single leader to take on directly, even with a public mandate and majorities in both houses of parliament. If a successful campaign helps him tame the shadow shoguns within his own party, pacifying them with another four years in office, then perhaps it will have been worthwhile.
I remain sceptical, though. Too often consensus in Japan is an excuse for inaction. Japanese voters — not to mention international investors — gravitated to Abe because he promised decisiveness. After two years of build-up, they want to see him get serious about his restructuring programme: lowering trade barriers, loosening labour markets, encouraging innovation, eliminating red tape, enacting a binding affirmative-action programme for women.
I’m not urging Abe to tread on Japan’s democracy — he’s already done enough of that. But it’s time to show some teeth. If that means angering some rice farmers, male managers, bureaucrats and labour unions, then so be it. That’s why voters elected him. — Bloomberg View
This article first appeared in The Edge Financial Daily, on November 18, 2014.