Japan’s political kaleidoscope (8): The new, the old, and the Noda
Posted by ampontan on Tuesday, September 6, 2011
PLENTY of people were saying plenty of interesting things last week with the start of the Noda Cabinet. Here are some of them.
The Asahi Shimbun
It wasn’t what the Asahi said in an English-language article that was remarkable. Rather, it was the fact that they — Japan’s preeminent newspaper of the left and Kan Naoto’s only reliable water carrier — were the ones to say it. It started with the headline:
Noda, Finance Ministry Speak as One on Tax Hikes
The first sentence:
Having an advocate of tax hikes as prime minister is a dream come true for Finance Ministry mandarins who have long championed an increase in the consumption tax rate.
The body of the article contains a good description of how the bureaucracy in general, and the Finance Ministry in particular, becomes entwined in the political process. Now for the finish:
Senior Finance Ministry officials asked Noda to appoint either former Secretary-General Katsuya Okada or former Deputy Chief Cabinet Secretary Yoshito Sengoku as finance minister because both men support tax increases.
Eventually, Noda picked Azumi Jun, handing him his first Cabinet portfolio.
“Noda chose a lightweight minister without losing any sleep over the matter because he served as finance minister himself,” a DPJ lawmaker said.
That last sentence is clever for the plausible deniability it provides. Did they mean Mr. Noda isn’t losing any sleep because he is capable of acting as his own finance minister, or because he was a lightweight finance minister himself who subcontracted policy decisions to the ministry. I suspect the latter.
I don’t recall much of this from the Asahi when Kan Naoto, the preceding Finance Ministry puppet and tax hike promoter, was in office, but perhaps I disremember.
Please note that I’m still having trouble with the link function. I just sent a note to WordPress. The article should be easy to find, however.
It’s worth reading anything by Mr. Hasegawa, an award-winning book author, columnist, and member of the editorial board of the Tokyo Shimbun. Here are some excerpts from an article in Gendai Business Online commenting on Noda Yoshihiko’s use of the term “no side” after winning the DPJ presidential election.
The phrase comes from rugby and is (or at least was) used by the referee to signal the end of the match. I’ve read that it’s obsolete, but being from a country that doesn’t play rugby, you could fool me. Japanese politicians often use it in this context to call for party unity.
“The use of the expression “no side” is straight from the Liberal-Democratic Party politics of a generation ago.
“In those days, Kasumigaseki (the bureaucracy) handled all the policy questions. Policy was essentially identical to that which they created, so the politicians in Nagata-cho promoted themselves using traits unrelated to the core of policy, such as decision and execution, or tolerance and compassion. It could even be said they had no other way to compete than to emphasize their capacity to execute policies or their broad-mindedness.
“People understood that politics of that sort was a failure, so the Democratic Party championed the cause of disassociation from the bureaucracy and political leadership during the general election two years ago. The politicians said they would retrieve policy from the hands of the bureaucracy. In the end, however, they were ensnared by Kasumigaseki, and their effort at eliminating the reliance on the bureaucracy failed. We’re now in the third DPJ government with the Noda administration, and there’s nothing else to say but “no side”….
“….The “no side” politics are unlikely to be successful because politics that are carried piggy-back by Kasumigaseki no longer functions. Kasumigaseki has gotten too big. It micromanages everything in the private sector (literally, every time [the private sector] raises or lowers its chopsticks), and maintains a system of skimming off taxes through amakudari. There will be no revival for the Japanese economy.
“The recognition that the root cause of the economy’s stagnation is the system of Kasumigaseki leadership has begun to spread throughout the population due to the bitter experience of the Tohoku disaster and the Fukushima accident. In Nagata-cho, they are beginning to realize that perception is growing.
“Many Democratic Party MPs are in a mouth-to-mouth feeding relationship with Kasumigaseki, and the politicians have noticed they’ll be at risk in the next election. While Noda won the DPJ election, many within the party are still opposed to a tax increase.
“The euphoria following the selection of the new party president had an immediate feel-good effect, but the Diet members will shortly return to reality. The turbulence will reemerge with a vengeance as soon as a serious effort is made to pursue a policy of higher taxes.
“What’s more, that day will soon arrive. They’re now at the stage of formulating a third supplementary budget calling for an increase in core taxes as a funding source for Tohoku reconstruction. They also plan to present a bill by next March to raise the consumption tax to fund social welfare. In short, the debate begins in the fall.
The first of the highly publicized governmental policy reviews held by the DPJ in November 2009 was one of the most transparent political dog-and-pony shows ever staged. The idea was that the politicians would put the bureaucrats’ feet to the fire by grilling them about questionable policies. They would end the wasteful enterprises and use the money to fund their campaign promises.
It didn’t take long to find out that the reviews were scripted — literally — by the Budget Bureau of the Finance Ministry, complete with recommendations on which policies to cut. It was a convenient way for the ministry to strengthen its control relative to the other ministries. Further, the recommendations of the review panel had no force in law. Some of the programs ostensibly cut, such as one for the Education Ministry, were quietly restored into the budget of a different ministry a few months later.
The panel did have some good ideas, however. One of them was a freeze on building new housing for national civil servants, other than reconstruction in the event of an emergency. (This is often a job perquisite in both the public and private sectors.)
But it seems there’s been a late summer thaw. Construction began on 1 September of an 800-unit apartment block in Asaka, Saitama. Whatever debate was conducted about lifting the freeze hasn’t been reported, and there’s no indication the Government Revitalization Council was involved.
Each of the apartments has a living room, dining room, kitchen, bath, and three extra rooms. The rent and deposit are free, courtesy of the taxpayers. The cost of the project has been estimated at JPY 10.5 billion. Despite a location next door to the Asaka municipal offices, only national civil servants are eligible to live there. It’s prime real estate 10 minutes on foot from the train station.
The housing accommodations for national public employees are under the jurisdiction of the Finance Ministry, so the Finance Minister had to give his authorization to end the freeze and begin construction. Based on the timing, that means the person who approved the project in apparent contravention to government policy was the new prime minister, Noda Yoshihiko.
How thoughtful of him to let us know.
If the government was serious about ending wasteful government expenditures, all these properties would be sold and no new ones built. The private sector has no problem handling housing construction. The public sector has the problem of funding rent-free accommodations for its employees with public funds.
Eda Kenji on the polls
Mr. Eda is the secretary-general of Your Party. Here are excerpts from two blog posts last week:
“It was predictable to an extent, but all the polls conducted over the weekend showed the support rate for the Noda Cabinet at roughly 60%. The highest was the Yomiuri at 65%, and the lowest was the Asahi at 53%. Interestingly enough, the rate of support in the newspaper polls was highest at those papers leaning to the right, perhaps because Mr. Noda leans to the right himself. (Note: Does the motivation for the first Asahi article make more sense now?)
“This high support is likely the result of the effect of the Aida Mitsuo poem (about the dojo fish), Mr. Noda’s personal modesty, and the good feelings about the Cabinet selections made with party unity in mind. The polls also probably reflect the reaction to the fact that Mr. Kan was so terrible.
“Nonetheless, I think the people of Japan are really kindhearted. (To use the analogy of the traditional wedding present of cash), the amount of the present for a third wedding and honeymoon in two years shouldn’t be the same as it was for the first….If this continues, I am deeply apprehensive about the disappearance of a sense of tension from politics and the politicians. Most politicians are risk-averse opportunists. They’ll look at the going rate for wedding presents. If the Cabinet is a failure, they’ll think all they have to do is replace the head….At any rate, when the yearend budget formulation is finished, the rate of support will have plummeted and the government will again be on the verge of collapse….
“…Meanwhile, some in the LDP are saying it will be difficult to combat the Noda Cabinet and its initial support rate. Well, of course it will be. The LDP has joined with the DPJ as two of the parties in the three-party agreement, they’ve laid out a course of tax increases to pay for reconstruction, and they’re on board with a 10% consumption tax increase for social welfare schemes. With the difference between the two parties on these issues so small, no wonder the LDP finds it difficult to attack.”
A note on polls
Some in the Western media have reported that the new Cabinet has received “strong voter support”. If this is the best they can do when filling space, they should consider syndicated horoscopes instead. The support is nothing more than a first impression, it’s skin deep rather than strong, and since the polls are conducted by random digit dialing, no one knows whether the respondents are voters or not.
One doesn’t have to have a long memory to recall that Kan Naoto had even higher ratings in June 2010 when he displaced Hatoyama Yukio and shut Ozawa Ichiro’s supporters out of the Cabinet. As summer turned to fall, however, he lost more than 40 points in one newspaper poll in two months over his government’s mishandling of the Senkakus incident. Mr. Noda’s numbers are only a tad better than those of the LDP’s Fukuda Yasuo when he took over in 2007, and he lasted just a year.
Besides, there’s no reason to pay serious attention to what the foreign media writes about Japanese politics until they demonstrate that they understand most Japanese prime ministers aren’t “leaders” as understood in the Western sense, but the principal spokesmen for the decisions of their party.
The obvious exception was Koizumi Jun’ichiro. His successor Abe Shinzo tried to do the same, and did have some success (as the next excerpt shows). But Mr. Koizumi was an act nearly impossible to follow, and the primary audience was a news media more irritated than a pack of gunpowder-fed junkyard dogs after five years of success and popularity by someone who wasn’t a European-style social democrat. Kan Naoto tried too, but because character is one of the prerequisites for leadership, he was unlikely to succeed from the start.
Mr. Okazaki was once ambassador to Thailand, and he writes on diplomacy and foreign affairs. Here are some excerpts from a piece that appeared in the Sankei Shimbun.
I have hopes for the Noda Cabinet
“After it seized power, the DPJ offered only those anti-establishment arguments that are the critical elements of their defining characteristics, were uncontrolled in their self-indulgence, and were rebuffed at every turn. They learned from those lessons, and their promise to change the planks of their party platform for the three-party agreement is the most concrete example….They tested the most childish ideas of postwar liberalism, such as anti-Americanism and an approach to Asia, and they learned how unrealistic that is…
“They get the sequence backwards when they ask for experts’ opinions after something has happened. They should be listening to opinions regularly, and when something happens, they must decide. Their subordinates are already busy, and the excessive workload of selecting and convening the members of a commission is too heavy….
“If they’ve learned the lesson that the people have suffered and had to bear heavy burdens since they’ve taken power, it will be a positive for the two-party system in the future. Most important, I think, has been the generational change….In the DPJ, the generation of radical student demonstrators has left the scene, and they’ve moved on to the next generation.
“The LDP has also changed during this time. Prime Minister Abe Shinzo stepped down due to illness, having amended the three laws regarding education, established the legal framework for a national referendum (for amending the Constitution), and came right to the point of permitting the exercise of collective self-defense. The party responsible for frustrating the end of the postwar regime was not the DPJ, however, but the LDP. Since it’s been in the opposition, the LDP has firmed its support for recognizing the exercise of collective self-defense as party policy…
“With the new administration, they should not be so niggardly as to worry about the DPJ recovering its reputation and the effect that would have on the next election. If there is an offer to cooperate on policy, it would be best for them to humbly accept it and cooperate. It’s more important to deal with the crisis in Japan of the continuing (political) vacuum.
“I returned from a banquet in a taxi on the night the DPJ held their presidential election, and even the other passengers were saying how relieved they were that it went well. No one knows what’s going to happen in the future, but those were the voices of relief that the days of Hatoyama and Kan, who used the nation of Japan as the subject in a vivisection experiment for amateurs, are over.”
The relentless Mr. Takahashi is a former Finance Ministry bureaucrat, author, journalist, and university professor. He is not as sanguine about Mr. Noda as Mr. Okazaki:
“Prime Minister Noda Yoshihiko wrote the book The Enemy of Democracy when the DPJ was still in the opposition. In it, he said:
26,000 former national civil servants have taken amakudari jobs in 4,700 (public) corporations, and JPY 12.6 billion of hard-earned tax money flows to these amakudari corporations annually. No matter what budgets we formulate, we will be unable to overcome our economic crisis until this gimmickry is ended.
The facile recognition of an increase in the consumption tax represents the suspension of thought, and it ends the elucidation of such gimmicks as the wasteful use of the special account.
“The people’s hopes in these words were betrayed. The DPJ was unable to compile a budget or effectively utilize the Finance Ministry or the Bank of Japan because they did not reform the civil service system. That meant their plan to assert political leadership went nowhere. What I look forward to is to the extent to which the Noda administration will reform the civil service system.”
The aforementioned Eda Kenji thinks it’s impossible for the DPJ to reform the civil service system because they depend on public union support.
Mr. Kono presents himself as a small-government classical liberal, but he’s not quite there yet. Here’s a sentence from a recent website post:
We’ve attacked the ruling party by saying, for example, that the child allowance was just an example of doling out of baramaki, i.e., lavish entitlements (which it was) and we made them stop. But I cannot say the LDP has explained how it will support child-rearing.
And neither does it have any business supporting child-rearing. They can explain that government can best support child-rearing by creating an environment in which the economy thrives and allowing parents to handle child-rearing by themselves. In other words, by butting out.
Mr. Kono would do well to examine the tax proposal by former ambassador to China and Utah Gov. Jon Hunstman, who is running for the Republican presidential nomination in the U.S. Mr. Huntsman is no small-government classical liberal, but he’s got the best idea for tax reform presented by any of the candidates. From The Wall Street Journal:
The heart of the plan lowers all tax rates on individuals and businesses. Mr. Huntsman would create three personal income tax rates—8%, 14% and 23%—and pay for this in a “revenue-neutral” way by eliminating “all deductions and credits.” This tracks with the proposals of the bipartisan Bowles-Simpson commission and others for a flatter, more efficient tax system.
That means economically inefficient tax carve outs for mortgage interest, municipal bonds, child credits and green energy subsidies would at last be closed. The double tax on capital gains and dividends would be expunged as would the Alternative Minimum Tax. The corporate tax rate falls to 25% from 35%, and American businesses would be taxed on a territorial system to encourage firms to return capital parked in overseas operations.
Mr. Huntsman would repeal two of President Obama’s most economically debilitating creations, ObamaCare and the Dodd-Frank financial regulation law. Mr. Huntsman has it right when he says, “Dodd-Frank perpetuates ‘too big to fail’ by codifying a regime that incentivizes firms to become too big to fail.” He’d also repeal a Bush-era regulatory mistake, the Sarbanes-Oxley accounting rules, which have added millions of dollars of costs to businesses with little positive effect.
Mr. Huntsman says he’d also bring to heel the hyper-regulators at the Environmental Protection Agency, Food and Drug Administration and the National Labor Relations Board, all of which are suppressing job-creation.
In addition to the foregoing, Mr. Kono should consider restoring the policies to promote agribusiness that were begun under the Abe administration and ended under the Hatoyama administration. There was quite a bit of unused farmland in Fukushima Prefecture, to cite one example, even before the nuclear accident. The DPJ chose to offer baramaki in the form of individual farming household supplements to take advantage of the disproportionate representation of agricultural regions in the Diet for electoral purposes.
Both Japan and Mr. Huntsman would also do well to heed the success of Russia, which introduced a 13% flat tax a decade ago. That resulted in a string of annual budget surpluses that started in 2001. They had a deficit of 3.6% of GDP in 2009, not the best of years for government budgets, but were back into surplus last year.
While he’s at it, Mr. Kono might also take a tip from Gouverneur Morris, who wrote much of the American Constitution:
If the legislative authority be not restrained, there can be neither liberty nor stability. However the legislative power may be formed, it will, if disposed, be able to ruin the country.
And Morris wasn’t a classical liberal — he believed in a natural aristocracy.
The high yen
The sharp appreciation of the yen hasn’t been all bad for Japanese businesses. Japanese companies are shopping till they drop in corporate supermarkets overseas now that prices are at bargain levels. According to M&A originator and executor Recof, their purchases of overseas firms from January to August alone were valued at JPY 3.8842 trillion, already more than last year’s JPY 3.7596 trillion. They amounted to JPY 465.8 billion in August, double the amount for July. The buying is on a pace equivalent to that of the second-highest year, 2008, when JPY 7.4256 trillion was spent to snap up overseas corporations. Recently Kirin Holdings bought a large Brazilian beverage company, and Asahi Holdings now owns an Australia/New Zealand-based liquor manufacturer.
It’s all in the name
Here’s the first sentence from an AP article yesterday:
Typhoon Talas dumped record amounts of rain in western and central Japan on Sunday, killing at least 25 people and stranding thousands as it turned towns into lakes, washed away cars and set off mudslides that buried or destroyed houses.
Forget the AP’s frustrated novelist prose — What is this “Typhoon Talas” of which they speak, which isn’t a name a Japanese person would come up with? Here in Japan, it’s Typhoon #12.
It turns out to be the creation of the Typhoon Committee of the United Nations Economic and Social Commission for Asia and the Pacific, and the World Meteorological Organization, a revealing bit of nomenclature itself.
While those bodies need a way to quickly differentiate the storms, how is their function enhanced by names they don’t need and no one other than they or the news media use?
An article on the Discovery News site explains about the lists of names:
The two lists most Americans are familiar with cover the Atlantic and East Pacific. But there are also lists with culturally appropriate names that cover the Central North Pacific, Western North Pacific, Australian Region, Fiji Region, Papua New Guinea Region, Philippine Region, Northern and Southern Indian Ocean.
In other words, it would be news to Discovery News to discover that Talas isn’t “culturally appropriate” for Japan, the only country affected by WNP #12.
The article concludes:
As to whether using human names is the best approach: “That actually is an issue that comes up,” said Read (director of the National Hurricane Center). “Is there a better way to do this?”
Yeah. The way the Japanese do it.
Sounds like an Okinawan/Indonesian blend to me.