AMPONTAN

Japan from the inside out

Posts Tagged ‘Fujii H.’

The real losing dogs

Posted by ampontan on Wednesday, November 28, 2012

SEVERAL years ago, novelist Sakai Junko coined the expression makeinu, or losing dog, to refer to single people over the age of 30.

The term has other useful applications, however. Is that not the perfect descriptor for a left-of-center political party that loses the confidence of left-of-center newspapers? That’s exactly what happened to the Democratic Party of Japan. This article by the Asahi Shimbun is several months old, but it explains very clearly one of the most important reasons the party lost the trust of the Japanese public, and lost it almost immediately after they took office.

Among the Democratic Party of Japan’s many pledges when it came to power was to loosen the hold that bureaucrats had on policy issues and put politicians in charge.

Yet it never challenged the Finance Ministry, the bastion of the nation’s bureaucratic hierarchy.

In reality, the Finance Ministry has gained more clout under successive DPJ administrations, winning over prime ministers Yukio Hatoyama, Naoto Kan and now Yoshihiko Noda.

One of the key persons appearing in the story is former Budget Bureau chief Katsu Eijiro, who I’ve mentioned several times on this site.

In late September of 2009 (N.B.: one month after the DPJ took power), Kan (Naoto), who was national policy minister, was irritated because the government had not been able to decide on a basic budget policy due to a lack of revenue for the DPJ’s campaign policies.

Which everyone knew would happen even before the election, but then I interrupt.

Katsu, chief of the Budget Bureau, appeared. Kan asked when the basic budget policy should be drawn up if the budget was to be compiled by the end of the year.

“The DPJ has a grand manifesto,” Katsu said. “If you issue a sheet of paper and tell us to compile the budget based on the manifesto, we will follow the instruction.”

Kan was visibly relieved. “That makes it easy,” he said.

The meeting effectively put Finance Minister Hirohisa Fujii, not Kan, in charge of compiling the budget under the first DPJ administration.

Fujii, 79, is a former Finance Ministry bureaucrat. He became a Diet member after Hatoyama’s father, who was an administrative vice finance minister, advised him to go into politics.

“I don’t think politicians can make correct judgments on details of the budget,” Fujii said. “The Finance Ministry has a tradition encompassing more than a century. What is expected of politicians is to make decisions.”

Fujii was instrumental in installing Noda as senior vice finance minister under him.

Doesn’t that tell you all you need to know? Well, most of it, but not quite all:

Heizo Takenaka, who battled with the Finance Ministry over the initiative in budget formulation when he served as a Cabinet minister under Junichiro Koizumi, said tax increases, not spending cuts, benefit the Finance Ministry.

“The Finance Ministry derives its power by allocating money from a fat pocketbook,” he said.

Twas ever thus, in every country, but particularly in Japan. That’s why the relationship between the bureaucracy and the political class is always an issue here. Ending bureaucratic control of the government is one of the primary issues that has motivated the regional parties.

You know what they say about reading the whole thing? Read the whole thing.

Posted in Government, Politics | Tagged: , , , , , , | 3 Comments »

Consistency

Posted by ampontan on Sunday, October 7, 2012

PRIME MINISTER Noda Yoshihiko’s personnel reassignments for his Cabinet and party last Monday were the picture of consistency. First, his Democratic Party government remains consistent in keeping the revolving door of Cabinet positions spinning at a frequency that prevents them from performing any role other than as press secretary for the ministries they represent. Second, Mr. Noda remains consistent in his distribution of ministerial portfolios to people unqualified to receive them. Finally, an unqualified English-language news media remains consistent in its incapacity to understand and present useful explanations of the events.

Writing in Gendai Business Online, Isoyama Yukihiro reminds his readers that when Hatoyama Yukio, the first DPJ prime minister, assumed his duties three years ago, he said he wanted to maintain one intact Cabinet per administration. The law provides for as many as 14 ministers in addition to the prime minister, and Mr. Hatoyama did keep the reshuffling to a minimum. He appointed only 19 ministers, but then he lasted only nine months in office. His first finance minister, Fujii Hirohisa, lasted fewer than four months before resigning — and he was the only one qualified to serve that the party has assigned to that position. (In 1976, he was the head of the Finance Ministry’s Budget Bureau, the control tower of the Kasumigaseki bureaucracy.)

Mr. Isoyama notes there was dissatisfaction within the DPJ because not all of the victors were receiving the spoils. As a result, Mr. Hatoyama’s successor, Kan Naoto, used Cabinet appointments as the front end of a quid pro quo before the party’s presidential election. He went through 35 people in 15 months. Meanwhile, Mr. Noda has already tapped 38 different people in his year in office, partly because his power base in the party is weak. He also has to use the posts as gold stars and cookies to stem the flow of MPs leaving the DPJ for other parties. Altogether, 68 separate people have served as DPJ Cabinet ministers, and the overall total of appointments, reappointments, and reassignments within their Cabinets now total 152.

Your Party chief Watanabe Yoshimi compared the Noda Cabinet V.3 to an “inventory clearance sale for people seeing Cabinet posts”. Azuma Shozo of the People’s Life First party (the Ozawa group) called it the “Making Memories Cabinet.”

This might be excusable to an extent if competent people were being appointed, but that isn’t the case. Mr. Noda keeps putting people with no experience or sector-specific expertise in Cabinet positions, a tacit admission that the bureaucracy still exercises real control. Once again, he appointed as finance minister someone who knows nothing about government finance, and who has never held a Cabinet position before. Yet some in the news media still do not understand what’s happening. Here’s this from the AFP just before the changes:

Another highlight of the reshuffle is who will replace Finance Minister Jun Azumi, who is being propelled into a top party post.

Although Azumi has not been universally popular in financial circles, there have been concerns of a policy gap now that he is departing, although the minister has assured there will be no “political vacuum”.

And here’s what Reuters said after Mr. Noda made his decision:

Prime Minister Yoshihiko Noda plans to name senior lawmaker Koriki Jojima as the country’s new finance minister in a cabinet shake-up due later on Monday, Japanese media reported.

Jojima, who has served as parliamentary affairs chief in the ruling Democratic Party of Japan (DPJ), would replace Jun Azumi and take charge of the world’s third largest economy as it teeters on the brink of recession in the face of a global slowdown and strong yen.

Jojima would likely stick to a fiscal reform drive pursued by fiscal hawk Noda, as he has worked closely with the premier in designing Noda’s signature plan to double the sales tax to 10 percent by October 2015.

But little is known about Jojima’s view on monetary and currency policies.

But a lot is known about how little is known about Japanese politics by the AFP and Reuters sausage grinders. There were no real concerns of a “policy gap”, because Mr. Azumi, a former TV presenter, knows nothing about fiscal policy other than what his Finance Ministry tutors spoonfed him after his appointment. Little is known about Jojima’s view on monetary and currency policies because he doesn’t have any. He majored in animal husbandry at university, was hired by Ajinomoto after graduation, and decided that labor union activities were preferable to working for a living.

“Fiscal reform” in Reuters-speak means tax increases, especially of the progressive variety. The media applies the term “fiscal hawk” to Mr. Noda, as they did to Kan Naoto, because they’re parroting, either directly or indirectly, the Finance Ministry’s talking points. Mr. Kan couldn’t even explain the multiplier effect during his first Question Time session in the Diet after his appointment.

What they don’t say is what everyone in Japan who pays attention knows. Here’s more from a different column in Gendai Business Online. It explains who really designed the DPJ tax increase plan:

Vice-Minister Katsu Eijiro resigned in mid-August, and it is reported that negotiations are underway to replace him with Manago Yasushi, head of the Finance Ministry’s Budget Bureau (N.B.: He got the job.) …The climate at the Finance Ministry is that achieving a tax increase (as Katsu did) is a medal for services rendered and a meritorious deed. Increases in tax revenue do not determine the evaluations of the Finance Ministry bureaucracy. That happens naturally when the economy improves. But increases in the tax rate are easily understood accomplishments. Those require amendments in the tax law, and are also proof that they twisted the “idiot politicians” around their little finger. Bureaucrats such as these are the real “kings of the Finance Ministry”, because they have shown themselves to be of higher caliber than the politicians.

Here’s a report a few days after the appointment:

New Finance Minister Koriki Jojima said the government must “carefully consider” whether to extend the currency swap agreement with South Korea but refused to be drawn out on whether Tokyo will propose an extension.

In other words, the Finance Ministry hasn’t decided yet.

But the biggest name in the new Cabinet is former Foreign Minister Tanaka Makiko:

Noda may tap Beijing-friendly Makiko Tanaka, 68, as a new addition to the cabinet, the Asahi Shimbun daily reported on Sunday.

Tanaka, daughter of former prime minister Kakuei Tanaka who normalised diplomatic ties with Beijing 40 years ago, has warm links with China which has been jousting with Japan over disputed East China Sea islands.

Noda is considering appointing Tanaka to a ministerial post to signal to Beijing Tokyo’s intention of repairing the damaged relationship, the Asahi said.

Commentator Ikeda Nobuo had only one word when he read that: “Stupid”. It is stupid, for at least two reasons.

One is that the Chinese will interpret it as weakness and as a prelude to a modern form of tribute paid to a vassal. The other is that Tanaka Makiko is temperamentally unfit for any executive position in general, and a Cabinet portfolio in particular. We found that out from her spin as a daytime drama queen when she was Koizumi Jun’ichiro’s Foreign Minister.

For some reason, Ms. Tanaka wound up as Education Secretary, a position for which she has shown no particular interest or aptitude. As everyone expected, she immediately demonstrated that she still doesn’t know when to keep her mouth shut. One of her first bon mots was that “There are deficiencies in Japan’s history education,” though she didn’t specify what they were.

The Chinese took it and ran with it. Here’s Li Wen from the Chinese academy of Social Sciences:

“Tanaka Makiko is the daughter of former PM Tanaka Kakuei, and for her to make this statement after her appointment is significant in that it would correct the rightward tendency in Japanese society to an extent, improve Sino-Japanese relations, and ameliorate Japan’s relations with its neighbors…We hope that it will expand, without ceasing, the progressive capacity to limit the rightward tendency of Japanese society, and improve its ability to act for peace in the Asia-Pacific region and the world.”

“The progressive capacity to limit Japan’s rightwing tendency and act for world peace?” Yeah, they’ve still got Reds in China. You hadn’t noticed?

The Tanaka comment is the product of mixing someone who favors tilting foreign policy toward China and away from the West with the need to satisfy the “progressive” teachers’ unions, one of the party’s principal power bases. It might help relax the immediate tensions with China, but only in the sense that it will lead the Chinese to think that the Japanese leadership is finally showing some sense and starting to deal with those crazy rightwingers.

It won’t help. Absent the arrival of a gargantuan black swan, she won’t be Education Minister this time next year, the DPJ won’t be in power, and there will be little change, if any, in the history curriculum.

Then there are the problems on the domestic side. She already criticized the government’s nuclear energy policy when she said she doesn’t think ending nuclear power by 2030 is feasible. She’s right, but that’s what you get when you roll a loose cannon into the Cabinet. You never know when it will go off and where the muzzle will be pointing when it does.

Makiko is also being Makiko. Another report just a day after her appointment claimed that she summoned one of the aides assigned from the Education Ministry bureaucracy into the women’s restroom to give him lengthy, detailed instructions on a particular matter. The report didn’t specify what she was doing in the women’s restroom at the time.

Japanese pundits saw other reasons for her selection. One suggested her current strength is roughly at the level required to snatch the focus from the opposition Liberal Democrats and the up-and-coming Japan Restoration Party on the daytime TV talk/gossip shows. (Those programs juggle politics, show business, and human interest stories.)

Another thought she might have been chosen because she’s one of the few politicians in the country who wouldn’t flinch from doing verbal battle with Osaka Mayor Hashimoto, the head of the Japan Restoration Party. Mr. Hashimoto has thrashed the teachers unions in both the city and prefecture of Osaka, and the theory goes that the DPJ wants someone in the Education Ministry capable of standing up to him.

Unfortunately for them, however, is that Ms. Tanaka verbal skills are due primarily to her “poison tongue”, as the saying goes in Japan. She’s quite entertaining when she runs people down, which is another reason she’s popular daytime television fare. (She once referred to former Prime Minister Hashimoto Ryutaro as “Old Man Pomade”.)

She is less successful when it comes to the give and take of debate, or persuading an audience through the power of logic and persuasion.

If Mr. Noda’s intent was to have some imagined Tanaka star power refloat his Cabinet, he was mistaken. Here’s one of the questions and the answer received when the Kyodo news agency polled the public from 1-2 October.

Q: How do you evaluate the selection of Tanaka Makiko to the Cabinet?

Good idea: 34.6%
Bad idea: 53.8%
No answer: 11.6%

The Kyodo poll

Speaking of the Kyodo Poll, it might be useful as a rough guide to the mood of the electorate, despite being conducted by random digit dialing (RDD).

Here are some of the other questions and answers. The numbers in parentheses are the totals from the previous month:

* Do you support the Noda Cabinet?
Yes: 29.2% (26.3%)
No: 55.3% (59.4%)
Don’t know: 15.5% (14.3%)

The Yomiuri Shimbun poll had the support rate for the Noda Cabinet a few points higher, but it’s not enough to make a difference. The increase was normal for a Cabinet reshuffle, and absent other factors, it will have subsided in the next month or two.

* Which party do you support?
Democratic Party of Japan (ruling party): 12.3% (12.9%)
Liberal Democratic Party (primary opposition): 30.4% (19.3%)
Japan Restoration Party (Hashimoto group): 10.7%
Putting People First (Ozawa Ichiro group): 1.9% (2.1%)

Note that the LDP supporters are more than double those of the DPJ, which in turn is barely ahead of Mr. Hashimoto’s party. Note also that the voters finally seem to be getting ready to flush the toilet with Ozawa Ichiro.

* Do you approve of the DPJ leadership changes?
Yes: 23.8%
No: 69.5%

* Do you approve of the LDP leadership changes?
Yes: 42.6%
No: 52.4%

* How do you evaluate the Japan Restoration Party?
Positive: 50.6% (60.2%)
Negative: 43.0% (34.7%)

* For which party will you cast your vote in the proportional representation phase of the election?
DPJ: 12.3% (12.4%)
LDP: 31.3% (22.2%)
Japan Restoration Party: 13.9% (17.6%)
Putting People First: 2.7% (4.9%)
Sunrise Japan: 0.3% (1.2%)

This is important for several reasons. First, it shows that the public has written off the DPJ, which are now beyond political redemption (perhaps for good). Second, this poll was taken after the LDP selected former Prime Minister Abe Shinzo as party head. Note the month-to-month increase from last month to this. Those numbers are giving the Japanese left (and the residential foreigner left) gas pains.

These results for Putting People First again show that Mr. Ozawa is fading away. He is a man out of time, and a man out of his time.

Perhaps you’ve read the commentary that the Senkakus spat with China is all the fault of Tokyo Metro District Gov. Ishihara Shinto, the “fiery rightwing nationalist”. Some people desperately want to believe that his influence on the relative Japanese hardline in the Senkakus is proof that he’s leading the country to the right.

Lunchmeat. Sunrise Japan is the party that Mr. Ishihara was instrumental in creating. There you see in black and pale blue (on this website) the influence of his party on national politics.

The correlation of his views and that of many members of the public on a specific issue does not indicate he is at the forefront of a greater national trend. This seems to be beyond the capacity of some drive-by commentators or pundettes with an agenda (sometimes the same people) to see.

The Hashimoto slide

Further, the numbers in this and other national polls show the first significant drop in support for Hashimoto Toru since his rise to national prominence. Some attribute that to the rough patch he’s had coordinating affairs with the Diet MPs who recently joined his party, or with some vagaries in the party’s statement of principles.

I disagree, just as I disagree with the LDP’s claim that their jump from the previous month came solely from the election of Abe Shinzo. What I think is happening is something that isn’t showing up in the polls, because the news media polls are too generalized to elicit certain answers.

This was the first round of polls taken after the Chinese ran amok in their September riots, implicitly encouraged by the modern Mandarins. The Japanese public is coming to see China as an existential threat. The shift to the LDP, I suspect, is due to the public’s choice of the political group they think is most capable of protecting them from that existential threat.

After being appalled by how the Kan Cabinet handled the previous episode in the fall of 2010, they know that’s beyond the DPJ’s capabilities. Mr. Hashimoto’s deportment in the past month was not so bad (or so different) to cause the public to sour on him. Had not China and South Korea behaved as they have over the past two months, his numbers probably wouldn’t have changed. The public, in general, still wants reforms of the type he is promoting. His problem is that they’ve already seen how one set of amateurs deals with the Chinese, and they aren’t willing to entrust foreign policy now to a new group of beginners.

Finally, lower house MP Sugimoto Kazumi, a first-termer from Aichi, left the DPJ and is considering membership in Your Party. That reduced the DPJ lower house delegation to 247, down from an original total higher than 300. They also have three members from the People’s New Party in their coalition, making 250. Subtracting Mr. Sugimoto and the three DPJ members who announced their intention to join the Japan Restoration Party, the DPJ’s magic number for losing the outright majority is eight, as one newspaper put it.

Noda Yoshihiko’s objective seems to be to put off a lower house election until the last possible minute, which is next summer. If the leakage from the DPJ continues, that decision might be taken out of his and his party’s hands altogether.

UPDATE:

Political correctness might have been a factor in the selection of Tanaka Makiko. The weekly Shukan Asahi quotes a source “close to the prime minister” as saying, “We searched for a woman to put in the Cabinet, but couldn’t find a suitable candidate. Still, we had to have at least one.”

They also cite a few other of the nicknames given to the new lineup: “The clean out the inventory Cabinet”, and one that’s not easy to translate concisely, but means “Put something good on their resume to dress them up for the election”.

Mr. Noda also dismissed the idea that she was appointed to ease the strained relations with China. He said, “It’s not as if I appointed her as Foreign Minister.”

*****
Maybe not tomorrow, but not too much longer

Posted in China, Government, International relations, Politics | Tagged: , , , , , , , | Leave a Comment »

Collision course

Posted by ampontan on Tuesday, April 24, 2012

THE political and social forces in Japan are now arrayed and moving on a course that makes a noisy electoral collision inevitable. How the forces sort out post-collision isn’t possible to determine, but one thing is certain — the collision will be just one of the major engagements in an ongoing war.

Nagoya Mayor Kawamura Takashi in Tokyo

That much is clear now that we’ve seen the evisceration of the work of Koizumi Jun’ichiro after he steered Japan to the course of reform. The reactionary Politburocrats included the old guard of his own party, the bureaucratic establishment at Kasumigaseki seeking to reclaim sovereignty over policy, and the chancers of the Democratic Party snouting around for any excuse to rise to the level of Politburocrat Nouveau. They accomplished their work in less time than the five years Mr. Koizumi spent in office.

Last week, the Men of System demonstrated again how they operate. The ruling Democratic Party lacks an upper house majority, so it was unable to prevent the opposition from censuring two Cabinet ministers: Maeda Takeshi of Land, Infrastructure, and Transport (for political misbehavior) and Tanaka Naoki of Defense (for being a doofus on the job).

Upper house censures are non-binding, so the two men can technically stay, but the opposition parties are refusing to participate in negotiations until they’re removed. Said LDP head Tanigaki Sadakazu:

“As long as those two stay in office, there will be no progress on the bill to combine social security and the tax system.”

Added New Komeito chief Yamaguchi Natsuo:

“We cannot respond to any parliamentary proceedings in which they have jurisdiction.”

Everyone understands that it’s a chabangeki farce staged to gain political advantage. Mr. Tanigaki and most of his party already back a consumption tax increase, and the ruling Democratic Party intends to use only 20% of the revenue from the increase for social security. A larger amount will be allocated for public works projects. Just like the old LDP.

The DPJ understands the farce better than anyone because upper house censure was a weapon they created to gain political leverage after they and their allies took control of that chamber in 2007. They censured then-Prime Minister Fukuda Yasuo in 2008 for reasons that were trivial then and which no one can remember now.

But when the plastic sword was used to smack them around, Prime Minister Noda and DPJ Secretary-General Koshi’ishi Azuma decided they didn’t like the idea after all. Both men are protecting the censured miscreants, and Mr. Noda won’t remove them from office. Said Chief Cabinet Secretary Fujimura Osamu last Friday:

“The prime minister’s policy is clear. He wants them to fulfill the responsibilities of their job.”

Both men of course realize that’s beyond the capabilities of Mr. Tanaka, but they have appearances to maintain and the Ozawa wing of the party to mollify.

Their display of plastic backbone has caused some consternation in Japan’s real ruling class, however. That spurred one of their agents in the DPJ to give the prime minister his marching orders.

That would be Fujii Hirohisa, the former head the Finance Ministry’s Budget Bureau — Dirigiste Central — also the former secretary-general in Ozawa Ichiro’s old Liberal Party, the first finance minister in the DPJ government (for all of three months), the head of the Tax Commission in the Cabinet Office, one of the DPJ’s Supreme Advisors, and (if the rumors are to be believed) a daytime drinker.

Mr. Fujii and his comrades worry this will delay their objective of raising the consumption tax to European social democrat levels. Therefore, Mr. Fujii called on the prime minister to “remove the thorns”, because:

“The two of them have definitely done something wrong.”

But he quickly added the real reason:

“Whenever the prime minister makes a decision on what to do, the basis for everything is to pass the consumption tax increase by any means necessary.”

Now what is Mr. Noda to decide to do? He wants to project himself as a man of vision with the unwavering resolve to gouge the public and maintain the system do what is best for Japan. He also reportedly hates being called a Finance Ministry puppet.

On the other hand, Mr. Fujii has been molding Mr. Noda since the DPJ formed its first government, when the latter was the deputy finance minister in both the Hatoyama and Kan administrations. The prime minister is also aware that the Finance Ministry is capable of using the various means it has developed for staging de facto internal coups d’etat.

In other words, look for Messrs. Maeda and Tanaka to start cleaning out their desk drawers, soon rather than late.

Weapons

Kasumigaseki in general and the Finance Ministry in particular have developed a substantial armory over the years to maintain their citadel. For example, all the national dailies have now published several editorials supporting a consumption tax increase. Most of them used nearly identical phrases, probably because they all received the nearly identical Finance Ministry briefing. The most enthusiastic member of the print media has been the Asahi Shimbun. They ran an editorial on 31 March titled “A consumption tax increase is necessary,” which included this content:

“With the rapid aging of society, we must provide even a small amount of stability to the social security system and rebuild the finances that are the worst among the developed countries. The first step requires that we increase the consumption tax. That is what we think.”

And the next day:

“It is important to come to a prompt decision without evading a tax increase.”

Another column appeared on 6 April with the title: “Politics and the consumption tax increase – stop the excuses”. It contained this passage:

“While you’re saying “first”—such as first reduce government waste, or first let’s end deflation, or first dissolve the lower house for an election — Japan will become insolvent.”

The Asahi insists the voters can have their say after the tax increase has been safely passed. That’s the same strategy foreseen months ago by ex-ministry official and current reformer Takahashi Yoichi.

As a newspaper of the left, the Asahi might be expected to favor higher taxes and stronger central government, but perhaps they have a more compelling reason. That would be explained by another news report that the Asahi tried to hide in an overlooked part of the paper, but which the rival Yomiuri Shimbun gave more prominent coverage on 30 March.

It seems that a tax audit revealed the Asahi failed to report JPY 251 million in corporate income over a five-year period that ended 31 March 2011. They were required to pay substantial penalties.

Golly, what a coincidence!

On the other hand, the bureaucrats are not picking on just the Asahi. All the newspapers and their reporters are being audited, which is a process that can take from several weeks to several months. The reporters treat their sources, anonymous or otherwise, to food and drink, and we all know that expense accounts are there to be padded. Tax officials are even said to be visiting the eating and drinking places listed on the returns for confirmation. Both the Asahi and the Yomiuri already had to refile their taxes in 2009.

The Asahi insists their editorials are unrelated to the audits, and they might have a point. There are about 20 people on the paper’s editorial committee, and all of them support a tax increase. Most of them once covered the Finance Ministry as members of the ministry’s kisha club, a system that combines short leashes with exclusive access. And many of them are also graduates of the University of Tokyo, which is the institution of choice for the Finance Ministry’s recruitment.

It’s natural to assume that the members of the old boys’ club would think alike, but a tax audit certainly helps to focus their thinking.

Not a rhetorical question

Fortunately, irresistible forces are headed straight for these immovable objects. Nagoya Mayor Kawamura Takashi, one of the squad leaders in those forces, launched his political juku in Tokyo on Saturday. He told his 200 students:

“I want to change the mechanism of this country, in which taxes are not reduced by even one yen.”

Mr. Kawamura is screening and preparing candidates for the next lower house election by using the same juku mechanism employed by Osaka Mayor Hashimoto Toru and Aichi Gov. Omura Hideaki. There will likely be an alliance of some sort between those local parties and Your Party at the national level. Their message is the largely the same.

Delivering that message on Saturday as the first lecturer was former METI official turned bureaucratic reformer Koga Shigeaki. Mr. Koga rebuffed requests to run for governor of two prefectures to serve as Mr. Hashimoto’s senior advisor, and he also has connections with Your Party. He told the juku students something that everyone in Japan apart from the Politburocratchiks understand: The current system of governance is dead, and the creation of a new system starts with civil service reform.

Part of the problem

The experience of Koga Shigeaki illustrates one of the many reasons that Japan’s Democratic Party has become part of the problem instead of the solution. He was selected as an aide to then-Reform Minister Sengoku Yoshito in the Hatoyama Cabinet, but that appointment lasted only a few days. Kasumigaseki wouldn’t stand for it, and Mr. Sengoku is not one to stand on principle when his place in the power structure is at stake. Indeed, the former lawyer confronted Mr. Koga with a semi-gangsterish threat (likely picked up from his former clients) during the latter’s Diet testimony on reform at the request of Your Party.

Try this for a thought experiment: Imagine that the cities of Chicago and Los Angeles, and their respective states of Illinois and California, are governed by local parties calling for radical governmental reform. One of the primary planks of that reform is putting a leash on the public sector. Three of those four chief executives were once members of the two major parties. The deputy mayor of New York is a colleague, and the mayor is a sympathizer.

Need I mention that this would be topics #1, #2, and #3 in the American mass media 24/7, and that the Journolist-coordinated efforts to slime them all would be rank even by their standards?

(Of course, this is only a thought experiment. California is actually heading 180° in the other direction.)

Japan has the oldest and most dynamic of the modern anti-elitist reform movements of the world’s major democracies. It’s the one with the greatest chance of success, and it’s also possible to make the case that it is the most positive in outlook. (The French just gave 18% of the vote to Marine LePen, though in their defense the Eurabia concept was idiotic even by Eurocrat standards.)

Predictions are usually a waste of time, but here’s one you can hold me to: The English-language media in general, and the FCCJ lackwits in particular, won’t bother to notice what’s happening in Japan until they find themselves ankle-deep in the muck after the bloodletting of the next general election, and some well-coiffed and -dyed heads will be adorning the tops of pointed stakes. The media will then be “surprised”.

And then they’ll launch a slimeball fusillade. Take it to the bank.

Kasumigaura

Yes, this is a national phenomenon. It’s happening again, this time in the city of Kasumigaura, a largely agricultural town of 43,600 in Ibaraki Prefecture.

After the city was created in 2005 through the merger of two smaller municipalities, the residents expected to benefit from the economies of scale. They really should have known better. Instead of one unified municipal office, the new city officials created two, one in each of the constituent entities. One of them required the construction of a new building. They also separately maintained their former methods of collusion for deal-cutting: one controlled by the civil service, the other organized by private sector industry.

It got worse after the new city’s second mayor took office in 2007, when he was unopposed in the election. Opposition quickly materialized after the city council voted themselves a 40% pay raise. A citizens’ group was organized, and they ran Miyajima Mitsuaki for mayor in the next election. He upset the incumbent by a 276 vote margin.

The problem, however, was that there was little turnover in city council members. Four are reformers, 11 are in the flybait class, and one is a fence-sitter. In one year and eight months, City Council has rejected 32 of the mayor’s initiatives, including the rollback of the salary increase, other salary cuts, and a bill to provide free medical care for children through the third year of junior high school. (That last is an idea common to many of the reformers in local government. There are several possible explanations for this mixture of welfare statism into what is primarily a small government philosophy, but it does suggest they are not ideologues.)

The mayor therefore announced last week that he and the citizens’ group will start a petition drive to recall City Council. They’ll have a month to come up with 15,000 signatures. It won’t be easy, but Mr. Kawamura overcame the same hurdle in Nagoya, and his hurdle was much higher because of that city’s larger population. I wouldn’t bet against them.

*****
It bears repeating that the next lower house election will not be the last battle of the war, regardless of the result. The reformers at the regional level have found their voice and their allies are not going to go away. Meanwhile, the Politburocrats are stocking the moat with as many alligators as they can breed.

The current system of governance requires that the bureaucracy oversee the process as the Cabinet formulates a bill and the ruling party examines it before it’s submitted to the Diet. Defying the wishes of Kasumigaseki requires a thorough knowledge of policy and some serious spine, neither of which is a hallmark of the political class anywhere. The civil servants devote a lot of time to anticipating objections to their favored policies and formulating arguments against those objections to feed to the politicians.

One advantage of the reformers is that people such Your Party’s Watanabe Yoshimi and Eda Kenji, Hashimoto advisors Koga, Sakaiya Taiichi, and Hara Eiji, as well as advisor to both Takahashi Yoichi, have extensive knowledge of policy and Politburocrat tactics, and took a clear public stand long ago.

Another man who combines both is Takenaka Heizo, a Cabinet member throughout Koizumi Jun’ichiro’s entire term of office, and the man responsible for producing the Japan Post privatization package. Mr. Takenaka has said that victory will require 10 years of continuous guerilla warfare.

In short: Japan is in the midst of the most civil Civil War a modern democracy has ever seen.

Drunken sailor watch

The Prime Minister’s Office unveiled its new website earlier this month, which they created as a portal site to provide comprehensive information on policy. That’s a fine idea, but the Jiji news agency reported the redesign of the old site required an expenditure of JPY 45.5 million (almost $US 560,000 on the nose).

What? You didn’t hear the detonation on the Internet?

A lot of people thought it could have been done for 10% of that amount, and some said they would have been happy to take the job at that price. They also said they wouldn’t have created a site with text that was unreadable for those using Apple’s Safari browser and without the kanji errors on the page for children.

Prodigy

Piano prodigy Okuda Gen appeared on television again Sunday night. Now ten years old, Gen has been playing piano since the age of four and giving concerts since the age of seven. He’s composed 50 pieces of his own. He likes all sorts of styles and plays classical music well, but is a particular fan of jazz pianist Oscar Peterson. On Sunday, he performed as an equal with an adult drummer and bassist.

The boy is remarkably self-assured for his age, even without his musical ability. It seems unlikely at this point that he’ll acquire the problems that usually attend children such as these when they enter The Jungle of Puberty.

But the most astonishing part of Gen’s story is that he started playing because he thought he would like it. Neither parent is involved with music, and they say he’s never taken a music lesson.

Here he is at age eight. Pull your socks up.

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Sunrise in the land of the rising sun

Posted by ampontan on Saturday, April 7, 2012

NOTHING is stronger than an idea whose time has come. Sakaiya Taiichi, the senior advisor to Osaka Mayor Hashimoto Toru, spoke to the Your Party convention in February. The speaker and his audience share a common purpose, and both know that the time for their ideas has come. This is what he said in English.

*****
Your Party is different from the other parties. It was not born in the Diet, but was born from a citizens’ movement — the first one in the postwar era. There might have been some in the Meiji period, but it’s a rare thing. Most parties are created when several MPs get together in the Diet. Most of those parties fall apart.

Your Party began when Watanabe Yoshimi advanced his own policies and started a citizens’ movement by himself. Mr. Eda (Kenji, party secretary-general) was in synch with that. It is a party of democracy that you should be proud of.

It happened again at the end of last year. Diet members scrambled together to form groups and receive the public subsidies given to political parties. They have no political views, ideology, ideas, or concept of what the state should be. Both the Liberal Democrats and Democrats are parties for creating political crises, trifling with the people and causing them misfortune. They leave policy to the bureaucrats, and never think about Japan the nation.

Postwar Japan had many splendid conceptions. One concept was in foreign affairs, in which it would stand with the Western powers, and become a small country in military affairs and an economic giant. The option to become a military power did not exist during the American occupation, so that is what happened. The second concept was economic: The (political) system of (19)55 (when the LDP was formed), bureaucracy-directed policy, the cooperation of the business world, and large scale mass production.

They thought that even if no one had any political views, all they had to do was defend these concepts. That continued until the 80s. After that, however, the times changed: The Cold War ended, and large scale mass production reached its limits. Despite that, however, no one still had any political views or a concept of the state. All they did was create political crises.

Then Watanabe Yoshimi became a minister in the Abe Cabinet, and continued to serve in the Fukuda Cabinet. He lasted longer than usual (laughter). He began to talk about something different — civil service reform. That earned him the enmity of the bureaucracy, but the amendment to the National Civil Service Law passed. I created the draft of that amendment in the advisory council.

But even though that amendment was passed, nothing changed. The bureaucrats are unyielding. The president of the National Personnel Authority did not appear in the Diet. In the end, the (Civil Service System Reform) headquarters revolted, and Deputy Chairman Koga was fired. Even though the law was passed, nothing happens. The reality is horrendous.

Watanabe Yoshimi is a rare politician. He thinks about the concept of the state. Those politicians have been extinct for a long time. Even if there are some drawbacks, the policies are truly great. This year — This is It! This is the year of decision. The one I uncovered was Mr. Hashimoto (Toru). The circle of reform is growing. This year is the year of decision.

Why will this be the decisive year? It will be an extremely difficult year for both the Japanese economy and the global economy. Thus, there are four parts to the agenda. One is a state/province system with regional authority. There are three forms of government administration: the nation, the prefectures, and the basic self-governing bodies. The Osaka Metro District concept would convert that into two levels. We must not mistake the state/province system as a model for merging prefectures. We must change the nation.

(After creating that system) the regions must not say anything about the affairs the national government will handle — specifically, foreign affairs, defense, and the currency. Meanwhile, the national government will not say anything about the affairs the regional governments will handle. That is how it should be.

Second is civil servant reform. Civil service is not a job, it is a form of status. Until the 80s, the Ministry of Health, Labor, and Welfare was a small government office. Both the health ministry and the labor ministry accepted only seven people each with a humanities background for the elite job track. At the same time, the Ministry of Agriculture, Forestry, and Fisheries, and the Ministry of International Trade and Industry were large ministries and accepted 26 people each. But now the Ministry of Health, Labor, and Welfare is a large ministry with oversight for 25% of the national income. The agriculture ministry has jurisdiction of no more than 1.8% of GDP.

Anyone can be a bureau chief in the health ministry. The agriculture ministry has no work. If you ask, what about transferring the career agriculture ministry bureaucrats to the health ministry, that would be absurd. It would be like entrusting the old Kishu domain (present-day Wakayama and part of Mie) to the people of the Satsuma domain (present-day Kagoshima). It isn’t a job, it’s a form of status.

Organizations and personnel must be based on the principle of functionalism, and selection must be based on ability and incentive. The organization of any body that defends its status will inevitably crumble.

Third is a growth agenda. Japan today is facing its third defeat. Defeat is not losing a war. Even if it loses a war, a nation will not collapse. True defeat is the collapse of an ethical view and the system.

The first defeat was the Bakumatsu period (at the end of the Edo period). The values of the Edo government were stability and equality. They purposely did not build a bridge over the River Oi (in Shizuoka). They sought stability and equality by preventing people from crossing the flow, and making the movement of people difficult. That’s when progress became important with the arrival of the Black Ships (Commodore Perry).

It goes without saying that the second defeat was in the war. Now Japan is in third period of defeat. The sense of ethics is in turmoil.

Now it is seen as a good thing to receive social welfare benefits. In Osaka, even if the primary school teachers scold their students by saying, “If you don’t study, you’ll have a hard time later,” the students retort, “I’ll get welfare payments, so I’ll be all right.” They say 10% of the junior high school students can’t do multiplication.

Mr. Hashimoto’s proposal is to conduct a relative evaluation of the teachers. Five percent of the teachers will be given the lowest grade of a D. Teachers who get Ds two years running will have to be re-trained. If they do not improve after re-training, they will be asked to leave. How many teachers receive the lowest grade under the absolute evaluation system now? It’s only 0.15%. That’s one-and-a-half people in 1,000. There’s maybe one in a school.

In Osaka, where the teacher evaluations are strict, the teachers’ union says the teachers there have three times the neuroses of teachers anywhere else. It’s a scam. The same statistics cite the cause of the neuroses. The primary cause is trouble with other teachers in the teachers’ lounge.

The fourth is creating an open Japan. That’s true also of the TPP. What did we do during the Meiji Restoration? The policy known as “The return of the lands and the people from the feudal lords to the Emperor.” In short, civil servant reform, giving up the status of samurai. That was the second year of Meiji (1870). Next, they cheerfully opened the country. (N.B.: The term Mr. Sakaiya invented for this idea, which he frequently uses in speeches, is suki suki kaikoku.) The Tokugawas grudgingly opened the country. In the brocade pictures (nishiki-e) of the times, foreigners are depicted as devils or tengu (monster-spirits). That changed.

The next thing they did in the Meiji Restoration was economic reform. In the new currency law of the fourth year of Meiji, the monetary units were unified as yen and sen. They started using paper money, and it became possible to create credit. In the Bakumatsu period, according to the calculations of Oguri Kozukenosuke, annual tribute accounted for only 40% of expenditures. Now, of the (government’s) JPY 104 trillion in expenditures, including quarterly adjustments, tax revenues account for JPY 42 trillion. Exactly 40%.

Annual tribute was only 40% of expenditures. Oguri Kozukenosuke worried that annual tribute would have to be tripled. That vanished in an instant with the start of the Meiji period and the new paper money under the new currency law. A deflationary economy has to be converted to an inflationary economy. In a deflationary economy, the past governs the future. There has to be nominal growth of about 3%.

The next thing they did in the Meiji period was eliminate the domains and create the prefectures. In other words, the state system. After that followed education reform. In Japan at that time, 40% of the boys and 25% of the girls learned reading, writing, and arithmetic at the terakoya, the Buddhist temple schools. It was the leading country in the world for education. Even in Great Britain during the Industrial Revolution, only one in four boys went to school. There was only one educational institution in all of Europe that admitted girls.

They eliminated all the terakoya and created schools. That’s because the objectives of education changed, from stability to progress. Educating people suitable for large-scale mass production was required. That idea still remains today. That’s why they taught that individuality and originality was a bad thing. They called all individuality a “defect” and originality was chastised as garyu (not following conventional methods).

Of course basic education is important. Ten percent of first-year junior high school students can’t multiply. That is the responsibility of the teachers, and they should be fired. Attending Board of Education meetings is a part-time job for teachers once a month. A view of education as a whole is not possible. The people who think that’s fine are the education ministry bureaucrats supported by the status system.

Teaching is also a form of status. There are many English teachers incapable of English. On the other hand, they have teachers who’ve come back from living in the United States teaching social studies. That’s all they have a license for. Next to the teachers fluent in English are the English teachers who can’t speak English at all, and the teachers back from the United States teach about the Japanese Diet, of which they know nothing.

We must change this absurdity with systemic reform. The drawback of reformers is their tendency to splinter without limit. That’s causing a lot of trouble right now in Osaka (laughter). The conservatives are surprisingly united. This reform is good, that reform is bad, only about 20% can agree on each issue. As a result, the unfortunate situation will continue.

That’s why, even if there are problems to a certain extent, we must agree that it (reform) is better than what we have now. Persons of good character are not capable of reform. Have you ever heard anyone say that Oda Nobunaga was a person of good character? (laughter) The requirement for reform depends entirely on the ability to achieve breakthroughs. Watanabe Yoshimi has that ability.

This is it. This is the year of decision. Let’s put aside our small differences and unite behind the big things we agree on. This year, please work so that we can increase our number to 300 (in the lower house of the Diet).

(end translation)

*****
Meanwhile, here is one of the most astonishing newspaper articles I’ve ever read anywhere, and that it appeared in the Asahi Shimbun is more astonishing still. The Asahi is the newspaper of the left in Japan, and the DPJ is the major party to the left of center (with quite a few members quite left of center). Here’s the headline. Note the past tense:

DPJ’S GOVERNING FIASCO: Party never challenged Finance Ministry

It’s a condensed version of everything I’ve been reporting on for the last three years. They’re writing off the DPJ.

It’s difficult to find a passage to quote because every sentence is a dagger thrust. Let’s stick to this:

Successive DPJ administrations have failed to make meaningful spending cuts. Despite rounds of budget screening, the three budgets compiled by the party effectively ballooned to record levels on an initial basis.

You know what they say: Read the whole thing. Also note the background of former Finance Minister Fujii Hirohisa and his opinion about the respective role of bureaucrats and politicians.

That’s the same Fujii Hirohisa who was the secretary-general of Ozawa Ichiro’s Liberal Party before it merged with the DPJ, and who doesn’t know what happened to the party’s public subsidies that it was supposed to return to the Treasury when it folded. (Some in the print media suspect it wound up in Ozawa Ichiro’s safe before being spent to buy real estate for his political funds committee.) That’s the same Fujii Hirohisa who appeared on a Sunday political talk show one day before Hatoyama Yukio made his first speech to the Diet as prime minister in 2009 and admitted the party had no intention of keeping all the promises in the manifesto. They would just keep enough of them to keep the people so happy they would return them to office four years later. They didn’t, they didn’t, and they won’t.

Remember all those so-called journalists who wrote about the “fiscal hawks” of the DPJ?

ROTFLMAO.

*****
The lead story in the 12 April edition of the weekly Shukan Bunshun is titled, Farewell, DPJ. They report the results of their polling that asks voters the question, “If a lower house election were held today…” (It’s becoming a cottage industry.) While they have the LDP doing better than in other surveys, they think the DPJ would lose close to two-thirds of its seats. They also think all three DPJ prime ministers — Hatoyama, Kan, and Noda — stand a good chance of losing their seats. (Hatoyama’s been on thin ice in polling for a while.)

*****
Get ready, people — the train is coming.
Oh, yes it is.

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Wrong question, Mr. Noda

Posted by ampontan on Thursday, November 10, 2011

FOR those who suspect that I exaggerate about Financial Ministry manipulation of Japanese politicians and the unsuitability of those Japanese politicians for either higher office or important government posts, here’s an anecdote from the 7 October edition of the weekly Shukan Post.

*****
After the Tohoku disaster this March, the Kan government discussed issuing more than JPY 10 trillion in bonds as a funding source for reconstruction and having the Bank of Japan accept the tranche. This was unacceptable to the Finance Ministry bureaucrats, who were intent on using the disaster as an excuse to raise taxes. They conveyed their position to then-Finance Minister Noda Yoshihiko, now the prime minister.

Mr. Noda declared at a news conference that it was against the law for the Bank of Japan to purchase Japanese government bonds, so he wouldn’t even consider it.

During Question Time in the lower house Financial Affairs Committee on 25 March, he was asked the following by LDP member Yamamoto Kozo, a former Finance Ministry official:

“Did you know that the Bank of Japan directly purchases a substantial amount of government bonds every year?”

According to the record, Mr. Noda replied:

“Directly? Uh, well…what the BOJ does is monetary policy, er…”

Asked again whether he knew that or not, the finance minister answered:

“No, I didn’t know that.”

Another LDP member then explained to Mr. Noda that while the law does prohibit BOJ purchases of government bonds, Article 5 of the law permits those purchases for specified reasons, within a specific monetary range, on the approval of the Diet. He also explained that the BOJ already purchases at least JPY 10 trillion worth of government debt issues every year, and this was well known by all government authorities involved with financial matters.

After the committee meeting, Mr. Noda complained to an aide, “Why didn’t they tell me about that?” He was referring to his tutors in the ministry.

*****
More to the point is why Mr. Noda didn’t do his basic homework when the Finance Ministry’s puppeteering skills are so well known in Japanese political circles.

The DPJ government has had four finance ministers in the two years since they assumed power. The last three — Kan Naoto, Noda Yoshihiko, and Azumi Jun — knew less about economic and financial matters when they were appointed than my mailman. They were tutored by the Finance Ministry after they were given the job. (In Mr. Noda’s case, when he was appointed deputy finance minister in the Hatoyama Cabinet.)

The first was Fujii Hirohisa, who lasted all of three months at the post. He resigned, reportedly because he found it too difficult to keep up with the job at his age. There were also stories, however, of friction with Ozawa Ichiro (as well as a taste for liquor in the daytime).

Mr. Fujii was the exception, because he is an ex-Finance Ministry bureaucrat — from the Budget Bureau, no less, which is the locus of power in the ministry. He might have been one of the tutors for the other three. Indeed, it was reported that he told Mr. Noda that true political leadership meant listening to the experts in the Finance Ministry.

Unfortunately for the rest of us, Mr. Noda believed him.

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The empty elites at the seat of power

Posted by ampontan on Wednesday, February 9, 2011

THE PRESUMPTION of the bureaucratic mandarins in an administrative state is that they are the elites who determine policy. The politicians are merely extras in a drama that they script and direct.

When Ishii Hirohisa, briefly the Finance Minister in the Hatoyama administration–but more importantly the former head of the Finance Ministry’s Budget Bureau, was named deputy chief cabinet secretary in the new Kan Cabinet, reformers in Japan collectively groaned. They already knew that the DPJ government’s promise to reverse the roles of the bureaucrats and politicians had become inoperative shortly after they took office, but now they knew it was dead. Mr. Fujii was brought back into the Cabinet specifically to keep and eye on and give instructions to provide advice and guidance to Mr. Kan. That’s the prime directive of the elite bureaucrats dispatched to serve in a Cabinet, especially those from the Finance Ministry.

Most Japanese have no idea who the deputy chief cabinet secretary is at any given time, and they seldom are quoted in the newspapers. But everyone’s hip to the game now, and the people who pay attention pay attention more closely to what Mr. Fujii says than to what the replaceable extra now playing the Finance Minister says.

Here’s what Mr. Fujii said during a speech in Tokyo on the 7th, responding to questions raised by some that if/when the consumption tax is raised, the rate should be lower for food and other daily necessities:

“A method of selecting (rates) by category, such as beefsteak or beef donburi, won’t work…(Lowering the rate on certain categories of products) would create vested interests.”

******
The closest analogue to the Japanese consumption tax in Europe is the value-added tax. Here are the tax rates for some European countries as of the present, with the rates for certain categories as of 2008. (I assume they still apply.)

United Kingdom
VAT rate: 20%
The rate for food, publications (books, newspapers, magazines), children’s clothing, and pharmaceuticals: 0%
The rate for household fuel/electricity: 5%

France
VAT rate: 19.6%
Food: 5.5%
The rate for publications varies from 2.1% to 5.5%
Pharmaceuticals: 2.1%
Movie, drama, and concert tickets: 2.1%

Germany
VAT rate: 19%
Food and publications: 7%

Sweden
VAT rate: 25%
Food: 12%
Publications: 6%
Movie, drama, and concert tickets: 6%
Pharmaceuticals: 0%

In contrast–

Japan
Consumption tax: 5% on everything

The Finance Ministry knows this—I found the list of rate discounts in a Japanese magazine, and the ministry was the source of their information. As the elite bureaucrats at that ministry would have it, these discounts create vested interests.

This illustrates the nature of the battle that Japanese reformers must fight: a civil war within government. It would be entertaining, if not educational, to hear an explanation how these exemptions create vested interests. True, one reason the Japanese print media keeps raising the issue of staggered tax rates is that they are intrigued by the British exemption for newspapers and magazines. Exemptions in their case, however, would not create vested interests—their interests already are deeply entrenched.

The lower rate in France for cultural events is worth noting. It’s not surprising that the French would consider culture to be as important for daily life as food and medicine.

It’s also worth noting that one of the complaints from the Left about the consumption tax is that it’s regressive—i.e., it falls on everyone equally regardless of income. The champions of progressive taxation would prefer a system of lower consumption tax rates on daily necessities to lessen the burden on those with lower income. But though he’s a man of the left, the congenitally cloth-headed Mr. Kan suggested instead that people with lower incomes could receive consumption tax rebates after an increase. After all, why streamline government and make it more efficient by not collecting some tax money to begin with when the role of government can be expanded, and dependency and a sense of entitlement to the tax spoils can be created among the citizens instead?

Further, exemptions or lower rates on the same categories that the U.K. exempts would negate the need for the DPJ’s budget-busting child allowance payments that Mr. Kan described as “epochal”.

That Mr. Fujii dismisses the idea out of hand exposes the emptiness of the Finance Ministry elites. That fine education doesn’t disguise their true nature as glorified bean counters with a will to power. The more money that flows to them, the more power they have.

*****
One of the primary objectives of Eda Kenji and Watanabe Yoshimi in creating Your Party was to break the stranglehold of the Japanese bureaucracy on government. Before starting his career as a politician, Mr. Eda was an employee of the old Ministry of International Trade and Industry and also served as an aide to Prime Minister Hashimoto Ryutaro. The Hashimoto Cabinet conceived the idea of creating a policy council of advisors from outside government to help formulate the budget. It was to be called the Economic and Fiscal Policy Advisors’ Council. Hashimoto, well aware of the games the bureaucrats play, insisted that the word “fiscal” be included in the title.

Mr. Eda describes what happened in Datsu Kanryo (Disassociating from the Bureaucracy), an extended dialogue with Mr. Watanabe. The bureau that serves as the liaison between the Cabinet and the Finance Ministry was asked to draw up a framework. The paper they submitted no longer had the word “fiscal”. When Mr. Eda asked why, the ministry bureaucrats explained it wasn’t necessary because the word “economy” in a broad sense encompasses fiscal policy. He reinserted the word and sent the request back, aghast at how blithely the bureaucrats had disregarded the instructions of a prime minister.

When the bureau resubmitted their proposal, they had removed the word again. Mr. Eda said they went through the charade three or four times before they finally relented. The reason, of course, was that the Finance Ministry didn’t want to relinquish control of fiscal policy formulation to anyone else. Lest you think this was a pointless game, the manipulation of terminology is one of the Kasumigaseki tools to debone reforms in practice while maintaining the appearance of implementing reform. They were abetted for years by those LDP legislators who served as de facto lobbyists for each ministry.

During the course of the conversation Mr. Watanabe said he had seen the same thing several times when he was the minister of reform in two LDP governments. He added that when he proposed a major reform of employment practices for national civil servants, one bureaucrat working as a Cabinet aide told him that unless he withdrew the proposal, the bureaucracy would stage a “coup d’etat”. What he meant was that they would find a way to bring down the government.

Every politician in Japan knows they are capable of it. When the Hashimoto Cabinet tried to remove the oversight of the financial services industry from the Finance Ministry, an unexpected credit crunch emerged just before an upper house election—along with the revelation of the previously suppressed news that a major Japanese securities company was bankrupt.

*****
During his speech in Tokyo, Mr. Fujii made a veiled reference to the nation’s recent prime ministers and complained that they lacked a sense of urgency. He made of point of saying that he was not singling out the current prime minister, but the message was clear.

Prime Minister Kan has been put on notice by the people who think they control the Japanese government.

Don’t feel sorry for Mr. Kan, however. He began waving the white flag even before he became prime minister.

*****
Pull another string…

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Absurd

Posted by ampontan on Monday, January 31, 2011

“There is no time to wait for the wobbly and unsteady Democratic Party to acquire the ability to be responsible for government through on-the-job training and for a two-party system to mature…At this rate, there will never be any reason whatsoever for entrusting the government to the Democratic Party.”
– Yosano Kaoru
, Minshuto ga Nihon Keizai wo Hakai Suru (The Democratic Party Will Destroy the Japanese Economy), published in 2010

The treasury says the national debt
Is climbing to the sky
And government expenditures
Have never been so high
It makes a fellow get a
Gleam of pride within his eye
To see how our economy expands
The country’s in the very best of hands
– Johnny Mercer, “The Country’s in the Very Best of Hands”

THE WORD politicians themselves are using to describe the government of Prime Minister Kan Naoto is “absurd”. Nishioka Takeo, the president of the Diet’s upper house, called on Chief Cabinet Secretary Sengoku Yoshito to resign earlier this month. After taking one look at the lineup of the new Cabinet in which Mr. Sengoku was replaced, Mr. Nishioka called it “absurd”.

The presidents of both houses of the Diet traditionally resign their party memberships before assuming office. Mr. Nishioka was a member of the Democratic Party of Japan—Mr. Kan’s ruling party.

Another reshuffled Cabinet card was Kaieda Banri, who moved from the Ministry of Economic and Fiscal Policy to the Ministry of Economy, Trade, and Industry. His former slot in the deck is now occupied by Yosano Kaoru, who resigned from the opposition Sunrise Party to take the position. Quitting parties is getting to be a habit for Mr. Yosano. Before last year’s upper house election, he resigned from the Liberal-Democratic Party to form the Sunrise Party. Mr. Yosano owes his Diet seat to the LDP because they placed him on their proportional representation list. He lost his bid for reelection to the seat in Tokyo’s District #1 in 2009. The winner was Kaieda Banri.

That’s the same Yosano Kaoru quoted at the top of this post.

When reporters asked Mr. Kaieda about this thoughts on the new Cabinet lineup, he answered, “Life is absurd.”

There was little enthusiasm for the changes even in the ruling party. Said a DPJ member of the Saitama prefectural assembly after the new ministers were announced: “Even today I was asked at the train station, ‘Just what is the DPJ doing?’”

Kamei Shizuka of the People’s New Party—yes, they’re still in the ruling coalition—addressed a DPJ party conference on the day before the Cabinet changes were announced, and put it in their faces:

“The DPJ is now a disgrace. I am sincerely anxious for you to rouse yourselves.”

One of Mr. Kan’s three themes for his administration is “ending the absurdities”, which tells you all you need to know about his political tin ear. He’s given no sign of either stepping down or calling an election any time soon, however.

*****
Mr. Kan’s Cabinet reshuffle may be absurd, but it was that or vacate the premises. One of the several reasons the upper house censured Mr. Sengoku was his attitude and intemperate language during Question Time in the Diet. (That’s why Mr. Nishioka wanted to see him gone.) Watanabe Yoshimi of Your Party described it as “impertinence, intimidation, and evasion,” to which he later added “bluster and prevarication”.

How can the nation be in the very best of hands when they've got them on their hips? (Sankei Shimbun photo)

The upper house also censured the generally well-liked Land, Infrastructure, and Transport Minister Mabuchi Sumio because his ministry is responsible for the Coast Guard, and he had to take the fall for the YouTube release of the Coast Guard video of the Chinese banditry in the Senkaku islets. While the censures are not legally binding, the opposition refused to discuss legislation with the ruling party with those two men still in the Cabinet, and the opposition has more seats in the upper house.

Another reason for the realignment was that the prime minister is desperate to juice his flagging popularity among the electorate. (He is said to be particularly unpopular among women.) An indication of his standing with the public was the ratings for his live appearance on the television program Hodo Station (News Station) on 5 January. The program usually pulls in an audience of 13% to 14%, and averaged 14.7% for the four weeks prior to his appearance. Those ratings often rise slightly when a sitting prime minister shows up. Then-Prime Minister Abe Shinzo picked up a 16.7% share.

Mr. Kan could manage only 6.9%.

But it’s not his fault! Said the PM at the DPJ party conference earlier this month:

“What we have done so far was not wrong. We have carrried out our job with resolution, but the problem is that we’ve failed to fully convey what we’ve done.”

If you think that sounds as if he’s channeling Barack Obama, here’s more: To remedy the situation, he’s considering a televised address to the nation, after the style of American presidents.

It had better be a good speech. The latest Shinhodo 2001 poll has his rate of support at 28.8%, with 67.0%–a cool two-thirds—opposed. Just a skoche under half of the respondents want a lower house election now, at 49.6%, while 41.8% were content to let it ride.

Here’s why the DPJ falls into the second camp. The 16 January edition of the weekly Sunday Mainichi features a simulation by two university professors of a lower house election. The magazine admits it’s a speculative endeavor because candidates for several constituencies have yet to be decided by some parties. That caveat notwithstanding, they project the DPJ to lose 124 seats from their current total of 306 to fall to 182. They think some of the DPJ party stalwarts could be at risk, including Hatoyama Yukio and Sengoku Yoshito, and that most of the Ozawa-backed candidates who won for the first time in 2009 should think about other employment. The LDP would regain its position as the party with the most seats at 212, a pickup of 96, but that’s still short of the 241 needed for a majority. The magazine suggests they would have to create a coalition with both New Komeito and Your Party (+25) to form a government.

Former Yokohama Mayor Nakada Hiroshi observed that Cabinet reshuffles to boost electile dysfunction are a perverse part of Japanese political culture. He’s also concerned that the use of the censure weapon in an upper house controlled by an opposition party could get out of hand and turn the Diet into a political battleground. Mr. Nakata has a point, but in this case the DPJ were hoist by their own petard. They were the ones who created the weapon after their 2007 upper house election victory.

Now the DPJ wants to introduce Diet rules that would prevent upper house censure motions from causing Cabinet members to lose their position. Fancy that.

The new lineup

A common observation is that the DPJ, which proclaimed itself the standard bearer for new politics, has become a throwback to the bad old days of the LDP with a leftward tilt. Five of the 17 Cabinet ministers are affiliated with Rengo, the Japanese Trade Union Confederation.

One criticism of the old LDP was its faction politics. During its heyday, five major factions functioned as parties within the party. The DPJ criticized that approach, but in 2008, Keio Professor Kusano Atsushi argued in Seiken Kotai no Hosoku (The Law of the Change of Government) that the formation of factions was inevitable in the DPJ.

The new Cabinet suggests he was prescient. Six “groups” in the DPJ have two members each. Former Prime Minister Hatoyama’s group has only one. No one affiliated with former party President and Secretary-General Ozawa Ichiro was appointed. All the members have won at least five terms in the lower house, similar to an older informal rule of thumb used by the LDP.

The absence of Ozawa allies suggests there might be something to the rumors that Mr. Kan and Mr. Sengoku are ready to purge him. The Asahi Shimbun gossips that they’ll dump him if a citizen review panel forces his indictment. UPDATE: Mr. Ozawa was indicted. (The appointment of only one Hatoyama affiliate—the man who launched and bankrolled the party, and its first prime minister—might also be a sign they’re ready to have Mr. Hatoyama leave along with him.)

The game

They say you can’t tell the players without a scorecard, but in this case, a scorecard won’t make much sense without knowing the game they’re playing.

People often cite the system of 1955, when two conservative parties merged to create the LDP and dominated politics for the rest of the century, as Japan’s primary political problem. Others, however, such as Watanabe Yoshimi of Your Party and Nakagawa Hidenao of the LDP, point to the statist system implemented in 1940 as explicated by Prof. Noguchi Yukio. That system instituted a total mobilization for the war effort and concentrated power in the central government under bureaucratic control. In that system, it makes no difference who the prime minister is. (Prof. Noguchi also thinks that the consumption tax would have to be raised to at least 20%–European VAT levels—to pay for social welfare programs.)

The Kan worldview

On 25 December last year, Kan Naoto met at the Kantei for three hours with a group of long-time friends who included Shinohara Hajime, professor emeritus at the University of Tokyo, and Kataoka Masaru of the old Shakai Shimin Rengo (Socialist Citizens Federation). It is thought they gave the prime minister a pep talk, urging him to stay the course to achieve a citizen revolution. They might have suggested Mr. Kan remember his lifelong political motto of “Deal with one problem and then move forward on all fronts.”

We already know the prime minister is a devotee of the ideas of Matsushita Keiichi, who looks forward to the dissolution of the nation-state and its replacement by supranational institutions above and local institutions below. Another aspect of the Kan philosophy is found in Prof. Shinohara’s book Shimin no Seijigaku (The Citizens’ Political Science), which holds that modern legislative democracy is unresponsive. Instead, Prof. Shinohara thinks policy should be determined by a random and compulsory (yes, compulsory) sampling of public opinion, followed by a time-limited debate in so-called “planning cells”. This would include even central government policies for science and technology.

That vision was shared to a certain extent by Hatoyama Yukio, who in his first Diet speech in October 2009 called for the creation of new values in a society that would enable greater participation by regional NPOs and citizens in issues involving public services. The DPJ favors greater support of NPOs with public funds.

Americans are familiar with the potential abuses of taxpayer-funded support of NPOs, as exemplified by the activities of the nefarious ACORN in the United States, which was forced to disband. Other Japanese point out that the Shinohara model resembles the Russian system of soviets (soviet being the word for “council”), originally worker and soldier councils thought to be a grassroots effort to promote direct democracy.

During the DPJ Party Conference held earlier this month, the delegates expressed the opinion that they had to return to their roots and differentiate themselves from “neo-liberals”.

Player transactions

Sengoku Yoshito traded for Edano Yukio

The widespread assumption that Chief Cabinet Secretary Sengoku Yoshito was the real power in the government prompted Kan Naoto to grumble to associates that he, and not Mr. Sengoku, was the prime minister. It was also widely assumed Mr. Sengoku took on so much responsibility for the operation of government because Mr. Kan was a constant threat to walk smack into the proverbial lamppost on the street.

As we’ve seen, however, the problem with this arrangement was that Mr. Sengoku’s behavior in office was so repellent people were fed up with him in just a few weeks.

He was traded straight up for Edano Yukio, the party’s acting secretary general, another former labor lawyer with ties to radicals. Mr. Sengoku will take Mr. Edano’s old job, and will also serve as the head of a party committee dealing with pension reform and whatever euphemism they’re using for raising taxes.

People thought Sengoku Yoshito was Kan Naoto’s puppeteer, and they think he operates the strings for Mr. Edano too. As far as it is possible to speculate about such matters, the most common view is that Mr. Sengoku is trying to take control of the party. He seems to be waiting for his chance to cut Ozawa Ichiro adrift, and the latest rumors have him trying to elbow aside the real party secretary-general, Okada Katsuya.

Here’s one DPJ MP on the selection of Mr. Edano as chief cabinet secretary:

“He was the secretary-general when we lost the upper house election last year. Should we forget his responsibility for that in just six months? I don’t understand it…none of the people have any expectations for this Cabinet.”

That was former Prime Minister Hatoyama Yukio, speaking of his own party while on a visit to India.

Okazaki Tomiko released outright

Okazaki Tomiko is another rodent who fled the sinking ship of the Socialist Party and scampered up the gangway to the Democratic Party vessel. She is opposed to Japan’s national flag and anthem. In July 2001, her political group illegally received funds from foreigners, including the director of the North Korean-affiliated schools in the country—a North Korean citizen–and a South Korean citizen who operates a pachinko parlor. The most controversial aspect of her career, however, was this:

That’s Ms. Okazaki participating in one of the weekly Wednesday comfort women demos at the Japanese embassy in Seoul in March 2005. She called for a Japanese embassy car to take her there.

They didn’t find some token make-work position for her in the Cabinet, either. She was named the chair of the National Public Safety Commission, which administers the National Police Agency. In other words, she was the head of the government agency in charge of maintaining public safety.

Politicians have the same right to free speech as anyone else, but they’re expected to exercise it with common sense and an awareness of their position. When a member of the Japanese Diet participates in a demonstration with Xs over the Japanese flag, it suggests an absence of common sense and self-awareness. Consider also what it suggests about Kan Naoto, who appointed her knowing about her background.

Ms. Okazaki’s immediate problem was that despite the ease with which she showed up for an anti-Japanese demonstration in Seoul, she couldn’t manage to drag herself to her office in Tokyo after North Korea shelled the South in November. Also, documents related to international terror investigations put together by the NPA somehow wound up on the Internet, and she made no effort to find a way to prevent the problem from recurring in the future.

She lasted just four and a half months in office.

Signed Yosano Kaoru to a free agent contract

Yosano Kaoru is the bad penny of Japanese Cabinet members. He’s now been a part of every Cabinet since Koizumi Jun’ichiro’s last one, with the exception of Hatoyama Yukio’s brief spell. He so often shows up when a Cabinet is on its deathbed that he became known as “the gravedigger” in the LDP.

He holds three portfolios in the Kan Cabinet: Minister for Economic and Fiscal Policy, Social Affairs and Gender Equality (which includes responsibility for the population decline), and Comprehensive Reform of Social Security and Taxes.

“Comprehensive reform of taxes” means promoting the Ministry of Finance position of raising taxes instead of cutting spending to fix the country’s budgetary problems. He’s long been known as the MOF bat boy. Your Party Secretary-General Eda Kenji was an aide to former Prime Minister Hashimoto Ryutaro when Mr. Yosano was the Deputy Chief Cabinet Secretary. Mr. Eda says he pushed the Finance Ministry line within the government more than even some ministry employees. Hashimoto wanted to reform the ministry by dividing up their responsibility for fiscal and financial service oversight, but the ministry was opposed. Mr. Yosano argued their case most strenuously. (A new agency for overseeing the banking, securities exchange, and insurance industries was created in 2000 after Hashimoto left office.)

Says Mr. Eda: “His entry into the Cabinet is the decisive factor in making this a Finance Ministry government.” That means, he explains, a tax increase government directed behind the scenes by the Finance Ministry.

He wasn’t alone in that opinion. Fukushima Mizuho, head of the Social Democrats, said much the same thing using many of the same words.

Takahashi Yoichi, a former official in both the Koizumi and Abe administrations, provides additional evidence in Gendai Business Online. When Takenaka Heizo shifted positions from Mr. Koizumi’s Financial Services Minister to Internal Affairs Minister to push the privatization of Japan Post, Mr. Yosano took his place. He argued within the Cabinet for rolling back government policy investment reforms, another Finance Ministry position.

Mr. Takahashi says he often debated with Mr. Yosano when the latter backed ministry efforts to debone reforms:

“Yosano is said to be an expert on policy, but he offered no policy-based arguments against my explanations. He only mentioned the names of people responsible for specific policies in the Finance Ministry and said we should do as they say. His statements were rather unlike that of a minister in charge of financial services.”

Mr. Yosano has also claimed there is no hidden surplus of funds in the Finance Ministry, but that nothing has manifested into something every year at yearend since 2006, and that something now totals JPY 40 trillion in the aggregate.

Here’s the delicious part: This politician who advocates a sharp rise in taxes to pay for social welfare spending, has no plans to cut spending or modify social welfare programs to make them more inexpensive, and fights governmental reform is referred to as a “fiscal hawk” in the Western media.

Absurdity squared

Mr. Kan’s selection of Mr. Yosano in the Cabinet is just the sort of move a dullwit would think is clever. The prime minister may even have thought the selection of a former enemy would been seen as a coup. The Asahi said Mr. Kan believed it would be the key to breaking the political deadlock. Three strikes and you’re out.

The prime minister had remarkably kind words for his former foe:

“I recognize that he is a politician with whom we have a great deal in common when it comes to the issues of the soundness of national finances and social welfare.”

But when Yosano Kaoru left the Liberal Democratic Party to form the Sunrise Party with Hiranuma Takeo, a high school classmate more than half a century ago, he told Reuters:

“We are fighting against the DPJ outside of the LDP. We intend to act as a brake. None of us is thinking about becoming the ruling party.”

In an April 2010 interview with the Asahi Shimbun, he said:

“This slovenly DPJ government must not be allowed to continue.”

And:

“I have doubts about the DPJ policies overall, their political methods, and their use of the bureaucracy. It is unusual among the world’s democracies for a party to lack such clarity in the decision making process as the DPJ.”

During the same interview, he defined political leadership:

“Chart a general course and take responsibility for it. Take responsibility for your statements. That’s political leadership.”

Speaking to the Nikkei Shimbun about government pensions in 2005, he said:

“The DPJ follows the Swedish model. They’re trying to pull us toward a society in which the people are liable for 75%. It is clear they will rely on taxes, which will result in a large tax increase.”

In 2009, he called the DPJ party manifesto “almost fancy,” said it resembled “works of illusionist paintings”, and was “something like artificial bait for the election.” He also said the DPJ’s pet policy of child allowance payments “would not be fully achieved unless the consumption tax rate was raised to 25 percent or higher.”

He maintained that attitude through the 14th of this month, when he said at a press conference:

“The certainty of the effect of the (child allowance) policy was not fully explained when it was introduced…my spirit of criticism remains.”

He changed his mind in the intervening five days. On the 19th in an interview with Fuji TV, he said:

“I have little sense that it is unnatural”

Fujii Hirohisa named bench coach

The Hatoyama Cabinet’s first Finance Minister, Fujii Hirohisa (78) was brought back as the Deputy Chief Cabinet Secretary. He is the former head of the Finance Ministry’s Budget Bureau, and his appointment is an unmistakable signal to both the ministry and those hoping to reform Japanese government by curbing its influence.

He left the Hatoyama administration after little more than three months for “health reasons.” Those weren’t specified, but it might have been a sore back from being pushed out the door by former friend and ally Ozawa Ichiro. There were also rumors he had to carry a stash of liquor in his official vehicle to help him make it through the day. Perhaps Mr. Kan finds him a kindred spirit.

Other transactions

Sengoku Yoshito assumed the Justice Ministry portfolio when the former minister Chiba Keiko finally resigned after losing her upper house Diet seat last July. He was replaced by Eda Satsuki, who years ago started out in the same party as Kan Naoto: the Socialist Democratic Federation. He is known to be an opponent of the death penalty in a country whose electorate consistently polls from 60% to 70% in favor of capital punishment.

It was rumored that party poster girl Ren Ho was thinking of jumping the Kan Cabinet mudboat and running for governor of the Tokyo Metro District, but she chose to stay on board. Her puny 8.8% support rating among Tokyoites from among a hypothetical slate of candidates in a Shinhodo 2001 poll might have been one of the reasons.

Also staying put is Agriculture Minister Kano Michihiko. This is Mr. Kano’s second time in that post (the first was in 1989 during the GATT Uruguay round discussions). He is viewed as an ally of the Agriculture Ministry bureaucracy. As such, he is opposed to the prime minister’s proposal to join the TPP. Many thought he would be replaced for that reason, but now he most surely will join with ministry bureaucrats and the national agricultural co-ops to try to block entry into the TPP.

If you’ve gotten the idea by now that Kan Naoto has no idea what he’s doing, I’m not going to try to convince you otherwise.

Absurdity cubed

Political commentator Yayama Taro was a long-time LDP supporter who backed the DPJ in the 2009 election because he saw them as the only way at the time to push forward with reform of the bureaucracy and government. His views have changed again:

“Prime Minister Abe of the LDP was the one who began to attack this disease, and Watanabe Yoshimi took up the baton as Reform Minister. They were unable to separate the adhesion between the politicians and the bureaucrats that has lasted 60 years. The DPJ won a massive victory in the 2009 election using the slogan, “Disassociation from the bureaucracy”.

“The resolution of this problem required the establishment of a National Strategy Bureau, a governmental reform council, and putting fiscal policy under the direction of the politicians. While implementing reform, they would establish a cabinet personnel bureau to evaluate civil service personnel.

“It should have been the work of the Hatoyama administration to pass the required legislation, but Finance Minister Fujii Hirohisa said a National Strategy Bureau wasn’t necessary and an office would do. Deputy Prime Minister Kan headed the office. He later became Finance Minister and was completely brainwashed by the ministry. He has not been interested in disassociating from the bureaucracy since becoming prime minister.

“Yosano is the politician the Finance Ministry bureaucrats have relied on the most. Based on his ideas and what he’s said, some have even referred to him as a Finance Ministry plant. Now he’s the Economic and Fiscal Policy Minister and Fujii is the Deputy Chief Cabinet Secretary. There are no laws securing the political disassociation from the bureaucracy. These personnel choices are simply to enable tax and social welfare policies in accordance with Finance Ministry specifications. The specifications for both policies were proposed by Yosano during the Aso administration. If the DPJ thought those policies were acceptable, they should have been adopted a long time ago.”

One economic news website quoted a politician whom the identified only as a former member of an LDP government:

“I have no idea what that person (Kan) wants to do. Even when he talks about the Heisei Opening of Japan, it has no backbone, and I can only view it as playing with words. The Cabinet reshuffle was just a switch from Mr. Sengoku to the Sengoku henchman Mr. Edano. The entry of the “lost bird” Mr. Yosano in the Cabinet has brought criticism rather than acclaim. A key will be how they change their methods of conducting the Diet. During the extraordinary session last fall, they adopted the fewest amount of bills as a percentage of proposed legislation in history.”

Coalition partner Kamei Shizuka was asked at a news conference on the 19th what he thought about the Cabinet and the prime minster’s policies about taxes, social welfare, and TPP. He answered:

“To present policies that you cannot achieve is not politics.”

As we’ve seen, one of those policies he might not achieve is participation in TPP. A total of 110 DPJ MPs affiliated with Ozawa Ichiro has formed a group to oppose Japanese participation, even though Mr. Ozawa has said he supports a free trade agreement.

Does even Mr. Kan know what he’s going to do? He just got back from giving a speech at the World Economic Forum in Davos, where he said that Japan will make a decision on its participation in TPP by June.

Before they worry about opposition either from inside or outside the party, the Cabinet still has to get on the same page. Kan Naoto says the issues of pension reform and the consumption tax are separate, but Yosano Kaoru says they must be considered together. Mr. Yosano’s stance on social insurance differs from the tax-based approach of the DPJ manifesto. The DPJ still does not have a common policy for a system for health care for the late stage elderly, despite their opposition to the system that came into effect during the Fukuda administration.

At a news conference on the 24th, Fujii Hirohisa was asked about Mr. Yosano’s statement that the age of eligibility for pension payments should be raised to 70:

“That’s his personal opinion. That question hasn’t been raised in a formal discussion.”

Absurdity in the fourth dimension

Mr. Kan is a recent convert to tax increases, at least in public. Speaking as the Finance Minister in the Diet on 21 January 2010, he said:

“First, there is the debate over the consumption tax, but as both the prime minister (Hatoyama) and I have said repeatedly, the current coalition government will not raise the consumption tax for four years….I think the primary reason the tax hasn’t been raised is the lack of trust by the people. They believe if they allow a government spending so wastefully is allowed to increase taxes, they will use the money wastefully.”

He also gave an opinion on when the discussion of a tax increase should begin:

“When we have so completely eliminated government waste that we could stand on our heads and not get a nosebleed…If we were to raise taxes at the present stage, when waste has not been sufficiently eliminated, we’d just repeat the same mistakes.”

Since he made that statement, there has been no sale of government assets, no effort to uncover the special accounts and hidden reserves in the bureaucracy, no effort to reduce personnel expenditures (they’ve put it off until 2013 at the earliest), only the most half-hearted of efforts to reduce government programs, a record-high budget with a record-high deficit, and a new proposal for an even higher budget.

The scorecard

The Cabinet reshuffle had no effect on market trading. Said Segawa Tsuyoshi, an equity strategist at Mizuho Securities:

“That it has absolutely no impact on stock prices demonstrates the relationship between politics and the market.”

In other words, the markets expect nothing from this bunch.

Kamei Shizuka visited the office of the Chief Cabinet Secretary as the official representative of the DPJ’s coalition partner to ask for an explanation of the prime minister’s Diet speech. He was angered when he discovered that Mr. Edano was not there, and the deputy secretary Fukuyama Tetsuro agreed that he should have been. Said Mr. Kamei:

“Don’t hold it against us if we leave the coalition.”

Mr. Edano belatedly showed up to provide an explanation, but Mr. Kamei was not mollified:

“They are incapable of consideration for other parties in their coalition. Politically, they have no idea what to do.”

One Western commentator observed that the DPJ is finding out that governing is different than campaigning. The real problem, however, is that they still haven’t found out, and the people in charge likely never will.

They’re certainly unlikely to find out in time for the 1,402 sub-national elections scheduled for April. DPJ-backed candidates have had their clock cleaned in several local elections after the government’s mishandling of the Senkakus incident with China, and their prospects are growing dimmer.

Yet at a party conference earlier this month, here’s what the prime minister had to say about DPJ support for those elections.:

“I’ve been in political parties that had no money for a long time, but this is the first time I’ve been in a party that can use all these funds for its activities. Shouldn’t I generously use the money that’s required (to compete)?

“All these funds” refers in part to the subsidies each political party receives out of public funds. The amounts vary based on their Diet representation. Those are the views of the man the foreign media hailed as a “fiscal hawk” when he assumed office last June on his fiduciary responsibility for taxpayer funds.

******
If Mr. Kan thought he would be showered in glory for the brilliant maneuver of including an opponent in his Cabinet, he was mistaken. An Asahi poll found 50% of voters opposed to Mr. Yosano’s selection.

On the 19th Oshima Tadamori of the LDP, the new minister’s party two parties ago, said Mr. Yosano had signed a pledge during the previous election in which he promised to resign from the Diet if he acted against the LDP. He’s now part of the DPJ caucus, but still in the Diet.

Said his old high school running buddy and co-president of the Sunrise Party, Hiranuma Takeo:

“It’s too bad that he’s leaving…When we formed the party, Mr. Yosano said that if we entrusted the government to the DPJ, Japan would be finished, so we had to bring it down. I wonder what’s going to happen with that.”

When Mr. Yosano gave his first speech as a member of the Cabinet in the Diet last week, he was heckled by members from both the LDP in the opposition and the DPJ in government. Would you dislike someone more if he was an enemy, or if he was a traitor?

After the speech, LDP MP Koizumi Shinjiro said:

“This is like a marriage proposal without a wedding ring. They won’t make any headway without sincerity and trust.”

And DPJ MP (and former Foreign Minister) Tanaka Makiko said:

“I do not sense any enthusiasm.”

Left unprotected

Sengoku Yoshito saw as one of his primary duties the prevention or amelioration of the inevitable Kan Naoto blunders. His departure from the Cabinet thus presented the country with the unlovely prospect of Mr. Kan fending for himself. The prime minister’s only political skill is the bullying of opponents—a skill no doubt honed by all those years of arguing politics in drinking establishments. His sense of the appropriate is also different from that of most people. (That is not photoshopped, by the way.)

It’s only been two weeks, and already we’re going to have to shift to a second hand to get enough fingers to keep up with the blunder tally.

His temper has earned him the nickname Ira-Kan, which translates nicely to the Irascible Kan. At a recent news conference he was asked whether he would call an election to have the people revalidate the party’s promise to cut waste before boosting the consumption tax. He glared, turned away from the questioner, and gave no answer at all.

He was also asked what he thought about the general perception the new Cabinet is a group put together to raise taxes. He answered:

“It’s unfair to be judgmental and change the subject of discussion.”

When the opposition suggested it would not participate in DPJ-led discussions about social welfare reform, he got judgmental himself.

“If the opposition parties do not actively participate in discussions about social welfare reform, it is no exaggeration to say that will be an act of treason against history.”

See what I mean about his only political skill?

That’s when he lost New Komeito. The DPJ has been hoping to tempt the opposition party into the coalition and thereby solve its problems in the Diet, but his statement seems to have ended any chance of that. Said party head Yamaguchi Natsuo:

“That’s a rather presumptious choice of words, isn’t it? The prime minister has a responsibility. What does he think he’s doing, challenging the opposition like that?”

The prime minister most recently stepped in it when he was asked about rating agency Standard & Poor’s downgrade of Japanese government bonds, partly because they thought the DPJ didn’t have a coherent strategy for dealing with national debt. Mr. Kan, a former Finance Minister, replied using the word utoi, a word seldom used by prime ministers. The word has several meanings depending on the context. One is that he hadn’t heard the news, and another is that he doesn’t really understand the subject very well because it doesn’t have much to do with him.

He was immediately called on his word choice by the opposition, the media, and his wife (during an event in Kyoto). Mr. Kan explained that he meant he hadn’t been given any information about the news at the time, which is a) probably untrue, but if true means b) his Cabinet is inept at gathering and managing information. The news had already been out for an hour.

Everyone else suspected the other nuance, in part because of the financial illiteracy he demonstrated when Finance Minister. He made a statement in the Diet that revealed he had no idea what the multiplier effect was. He also admitted to giving up on Paul Samuelson’s standard textbook Economics after the first 10 pages.

Mr. Kan was forced to explain at a news conference that his latest blunder didn’t mean he didn’t know government bond ratings from hot pastrami. Yosano Kaoru defended him, however:

“That is not a problem about which the prime minister should make a statement. It was proper for him to use the word utoi.”

In other words, interpretation #2. One wonders whom Mr. Yosano thinks should deal with the problem—the Finance Ministry bureaucrats in Kasumigaseki?

But that was not Mr. Kan’s position in May 2002 when the rating of Japanese government bonds was downgraded during the Koizumi administration. He publicly slammed the prime minister and finance minister and sarcastically asked whether they knew of the ramifications of the change. The Japanese media quickly dug up this old quote and dubbed it the “boomerang effect”.

No excuses for this absurdity

And how have the members of the English-language news media who cover Japan reported the Cabinet reorganization story? They played mimeograph machine for the government’s (or the Finance Ministry’s) briefings by filing articles under their own bylines that almost unanimously described Yosano Kaoru as a “fiscal hawk” and claimed the new Kan Cabinet was committed to “tax and pension reform”. And they think the Japanese media practices convoy journalism?

Rick Wallace in The Australian even went so far as to say this about Mr. Yosano:

“Perhaps the closest thing to a deficit hawk in a country where governments routinely live beyond their means…”

If Wallace is interested in seeing what a Japanese deficit hawk looks like, he might try some of the books by Nakagawa Hidenao, Eda Kenji, or Watanabe Yoshimi. If reading written Japanese is not his forté, he can always try this. I’d also suggest he look at the deficit totals in the annual budgets for the past 10 years to see who’s supported living beyond the country’s means and who hasn’t, but all that research might give him vertigo.

Lisa Twaronite, meanwhile, seems committed to getting it wrong, despite reading this post, which she commented on. She had this to say:

“Yosano, known as a fiscal conservative, has called for raising Japan’s 5% consumption tax to help chip away at Japan’s mountain of public debt.”

…thus bringing an entirely new dimension to the term, “conservative”. At least she briefly mentioned the reason Sengoku Yoshito was censured, which was more than Rick Wallace could do.

In an admirable display of corporate loyalty, the BBC took its correspondent’s word for what was happening:

“Our correspondent says the changes also bring to the fore ministers who support reform to tackle Japan’s massive public debt and the trade liberalisation sought by business leaders.

“The appointment of a veteran fiscal hawk, Kaoru Yosano, as economic and fiscal policy minister is being taken as a signal that Mr Kan is serious about reining in the costs of Japan’s rapidly ageing society.”

In contrast, the People’s Daily of China wrote last 24 December:

“The Cabinet of Japanese Prime Minister Naoto Kan on Friday approved a draft budget which hit a record 92.40 trillion yen (1.11 trillion U.S. dollars) for fiscal year 2011.The figure is marginally higher than the initial budget for 2010, which stood at 92.30 trillion yen, as the government seeks to raise spending on key policies amid rising social welfare costs.The budget will include more than 44 trillion yen (530.11 billion U.S. dollars) from issuing new government bonds, a second straight year when bonds have exceeded tax revenue as a source of income. The swelling budget is believed to be contradictory to Kan’s pledge to cut spending to restore the nation’s fiscal health.”

When the People’s Daily reports on Japan are more accurate than those of the BBC, it’s time for some people to reevaluate their assumptions about contemporary journalism.

Assuming any of these people are not European-style social democrats and actually are interested in a functional definition of fiscal conservatism, they might consider this by columnist Robert Samuelson:

“If we ended deficits with tax increases, we would simply exchange one problem (high deficits) for another (high taxes). Either would weaken the economy, and sharply higher taxes would represent an undesirable transfer to retirees from younger taxpayers.”

They might also look into how other countries have accomplished spending reductions, as Dan Mitchell explains here.

What can you expect?

After reading those reports, it will come as no surprise that the Foreign Correspondents’ Club of Japan is “facing difficulties”:

Georges Baumgartner, current president of the FCCJ and a veteran reporter for Swiss Radio and Television, expressed his frustration with the lack of news in Japan that would interest people elsewhere. “It’s quiet, like a little country like Switzerland,” said Baumgartner, who has been reporting from Japan since 1982. Japan is “blocked and paralyzed by the politicians and bureaucrats who don’t have the political will and courage to restructure the country to give a chance to young people. There is no new energy. . . . There are days that you can’t sell any story to your editors back home.”

Any journalist who thinks Japan is a quiet country with no news of interest is unqualified for his position on the face of it. True, they do have to please their editors back home, the ones responsible for turning their business into the smokestack industry of the information age. Then again, Baumgartner thinks the FCCJ is “a little island of freedom in Japan”, a presumptuous and arrogant bit of horsetootie that might explain why his organization has become irrelevant. (Let’s play journalistic poker. For every story someone can cite that the Japanese press has ignored, I can call and raise that bet with stories the New York Times et al. have ignored.)

If the FCCJ were populated by people nimble enough to hop off their bar stools and conduct serious research, they might have taken the approach on this story adopted by Takahashi Yoichi in Gendai Business Online:

“It is a restructure of a government facing its final days.”

And:

“(Yosano) is called a fiscal hawk because he parrots the Finance Ministry line. The objective is a fiscal balance, and the means is a tax increase.”

And:

“The new cabinet is a lineup of people whose arguments support continued deflation and tax increases. Prime Minister Kan says the economy will improve with a tax increase. Chief Cabinet Secretary Edano says the economy will improve with a rise in interest rates. Fujii Hirohisa favors a higher yen and “fiscal restructuring”. If these people put their ideas in practice, the DPJ really will destroy the Japanese economy, as the title of Mr. Yosano’s book had it.”

Afterwords:

* Mr. Yosano now says he thinks the consumption tax should be “more than 10%” by 2015. Watch for closer to 20%, assuming the same or similar people are still in charge.

* Another avenue the journos choose not to explore is Standard & Poor’s record of credit ratings. For example:

“Investors snapped up the $340.7 million CDO, a collection of securities backed by bonds, mortgages and other loans, within days of the Dec. 12, 2000, offering. The CDO buyers had assurances of its quality from the three leading credit rating companies –Standard & Poor’s, Moody’s Investors Service and Fitch Group Inc. Each had blessed most of the CDO with the highest rating, AAA or Aaa. Investment-grade ratings on 95 percent of the securities in the CDO gave no hint of what was in the debt package — or that it might collapse. It was loaded with risky debt, from junk bonds to subprime home loans. During the next six years, the CDO plummeted as defaults mounted in its underlying securities. By the end of 2006, losses totaled about $125 million.”

S&P downgraded Japanese government bonds, but they’re maintaining their top AAA rating on U.S. debt despite the huge American deficit and phalanx of foreign creditors.

******
The country’s in the very best of hands.

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The same old song

Posted by ampontan on Tuesday, January 25, 2011

TO CONTINUE with the theme of yesterday’s post, here’s another illustration of how the Japanese mass media is every bit as lamestream as their Anglosphere cousins. The following is an excerpt from a Yomiuri Shimbun editorial on 22 January.

*****
Prime Minister Kan has undertaken a radical change of course from his party’s position of excluding the bureaucracy under the name of “political leadership”. His approach to policy reconciliation among the various ministries and agencies is to allow the participation (in discussions) of undersecretaries and bureau chiefs from the bureaucracy in addition to Cabinet ministers, deputy ministers, and parliamentary secretaries. With his reexamination of the party’s platform for the 2009 lower house election, this represents an unavoidable course correction for the call of “political leadership” (N.B.: as opposed to bureaucratic leadership) that was the watchword for the change in government.

Smiling from start to finish, Prime Minister Kan spoke to the ministry undersecretaries in the Kantei conference room on the morning of the 21st. He told them: “I’m working with all of you to build a good country, so I want you to express your opinions without reserve to the ministers, deputy ministers, and me.”

When it was in the opposition, the Democratic Party harshly criticized the practice of bureaucratic leadership for the formulation and reconciliation of policy proposals. Their 2009 party platform clearly specified that the proposal, reconciliation and determination of policy was to be conducted through political leadership exercised by the Cabinet ministers, deputy ministers, and parliamentary secretaries. The Hatoyama administration pursued a policy of excluding the bureaucracy through such measures as the abolition of the council for undersecretaries and the establishment of a council for the Cabinet ministers, deputy ministers, and parliamentary secretaries (or seimu sanyaku in the Japanese shorthand).

The abolition of the council for undersecretaries, which had the role of reconciling the content of important policies for which more than one ministry was responsible, caused turmoil in the administration of government, however. Some officials in the Cabinet objected to such Hatoyama administration proposals as the revision of the National Civil Service Law and the bill to reform Japan Post just before their adoption, resulting in a delay of their adoption. The bureaucracy was not informed of some of the decisions taken by the Seimu Sanyaku Council, and the adverse effects of this repeatedly affected all the ministries.

In his instructions on the 21st, Prime Minister Kan said, “I want to create a positive, cooperative relationship between undersecretaries and politicians. There are several problems in our conduct of politics today, including self-reflection, taking things to extremes, and insufficiency. Politicians also understand that affairs will not proceed (toward resolution) if they think they alone can handle everything.” He thus recognized the flaws of conventional “political leadership”.

(end excerpt)

*****
Mr. Kan’s speech to the undersecretaries might sound familiar to those who follow Japanese politics. It is in effect nearly identical to the speech given by Aso Taro of the LDP to the same meeting of undersecretaries when he became prime minister in 2008, little more than two years ago. Said Mr. Aso: “In my Cabinet, the bureaucracy will not be the enemy. It is important to employ the bureaucracy skillfully.”

As Your Party head Watanabe Yoshimi remarked, “That signaled his intention to leave all the decision-making to the bureaucracy.” In the same way, Mr. Kan’s ingratiating address signals his intention to throw in the spoon (which the Japanese throw instead of the towel) on civil service reform.

Real change in the way the government operates was the reason the DPJ unseated the LDP in the 2009 lower house election. (It was the reason Koizumi Jun’ichiro was, and still is, so popular.) Instead of a real change, however, the DPJ morphed into a pre-Hashimoto Ryutaro version of the LDP, albeit with a leftist orientation. As another commentator noted, the Kan pep talk is indicative of the degree of DPJ guts.

Who needs a teleprompter when they gave me this cribsheet? (Sankei Shimbun photo)

Mr. Kan’s remarks also represent a denial of his lifelong political philosophy. He has long advocated encouraging greater citizen input into policy decisions, which he specifically contrasted to policy formulated by the bureaucracy and rubber-stamped by the politicians. But most observers knew that Mr. Kan had thrown in the spoon before this. It was apparent from watching his first speech to the Diet as prime minister last summer. He reverted to the old LDP practice of reading aloud from what the bureaucracy calls tanzaku, or strips of paper. Each ministry produces a piece of paper on which is written a few sentences for the prime minister to say, and they’re stapled together to create the text of the speech. Recent prime ministers had stopped using the tanzaku, but Mr. Kan chose parrothood.

This issue might be difficult to understand outside of Japan, but it is without question the most critical one in the country’s governing process today. Here it is again: the bureaucracy in this country considers itself to be the permanent ruling class. As I’ve mentioned before, one bureaucrat-turned-reformer politician said that on his first day at the Agriculture Ministry, he was told his job was “to make the monkeys dance”.

The bureaucrats do not see their role as offering policy options at the request of the politicians. They actively formulate their own policy proposals and hawk them to MPs every day in the Diet office building like a squad of colporteurs. Among those who most strongly advocate bureaucratic reform are the journalists who have served on governmental blue ribbon panels and witnessed their behavior at first hand.

If you think I’m exaggerating, perhaps you should read this article by Martin Fackler in the New York Times. It was published on 24 March 2010, when Hatoyama Yukio was still prime minister. Long-time friends might wonder why I offer a link to the Times—I usually limit links to reliable sources—but there are two reasons:

1. It is an accurate description of the problem.
2. It is the most surreal example of journalistic incompetence I’ve ever read.

Here’s Mr. Fackler’s explanation:

Since ending the Liberal Democrats’ nearly unbroken 54-year grip on power in last summer’s election, Mr. Hatoyama’s Democratic Party has proclaimed its top mission to be changing the way the country is governed by a process that is commonly called “escaping the bureaucracy.” The aim is to make Japan’s political system more responsive by ending more than a century of de facto rule by elite career bureaucrats at Tokyo’s central ministries, and empowering democratically elected politicians instead…(T)he ministries…long ran Japan with backroom decision-making.

He quotes then-Internal Affairs Minister Haraguchi Kazuhiro:

“The bureaucrats created a very centralized system that has become out of date, and unable to react to the world’s changes…We need a system that serves the people, not the bureaucracy and entrenched interest groups.”

One of Kasumigaseki’s favorite weapons is leaking information to the media. Mr. Fackler further quotes Mr. Haraguchi’s explanation of how the bureaucrats whispered potentially damaging stories about the DPJ to the press after he reassigned some civil servants against ministry wishes. That’s the same MO they used for scuttling the Abe administration’s attempt to privatize the Social Insurance Agency in 2007, responsible for national pensions. The final nail in Mr. Abe’s coffin was hammered in when the agency let it be known that the records for the pensions of millions of people were lost during the conversion from a handwritten system to a computerized system a decade before Mr. Abe took office. His government bore the brunt of citizen anger.

The reason this ranks as journalistic incompetence, however, is that Mr. Fackler’s paean to the DPJ was nonsense on the day he wrote it. The Japanese closely watching DPJ efforts to reform the bureaucracy knew that Mr. Hatoyama had thrown in the spoon as early as December 2009, three months before that article was published and only three months after he took office. That’s when stories in the weekly and monthly print media began to appear about the DPJ betrayal of their promises for government led by the politicians. That month, even then-DPJ Secretary-General Ozawa Ichiro criticized the government of his own party for allowing the Finance Ministry too much input in formulating the budget. The policy review touted in the article was orchestrated and scripted by the Finance Ministry’s Budget Bureau–information that was available to the Japanese public shortly after the first one was televised.

It wasn’t that many people were surprised. Mr. Hatoyama’s father, himself the son of a former prime minister, started his career in the Finance Ministry before turning to politics. One element of the Democrats’ plan to place policy formulation in political hands was the creation of a National Strategy Bureau to be led by elected officials. Then-Finance Minister Fujii Hirohisa—the former director of the ministry’s Budget Bureau—convinced the government to downgrade it to an “office”. None other than Kan Naoto was put in charge, and he soon complained that he didn’t have enough work to do there. (It was later revealed he spent a lot of time playing go on his computer when he did show up at the office.) Mr. Fujii is now back in the Cabinet again.

One of the most delicious parts of the Fackler article is this quote from Karel van Wolferen—yes, Mr. Oldie-But-Goodie himself:

“A half year of Hatoyama has produced more change than an entire year of Obama.”

Let’s reframe that: It is as if a commentator had praised President Obama in July 2009 for having kept his promise to withdraw American military forces from Afghanistan and shut down the detention facility at Guantanamo for good.

University of Tokyo Professor Yamauchi Masayuki is given the last word:

“(T)he changes they are making will not be easily undone.”

Now take another look at that excerpt of the Yomiuri editorial above.

What likely happened is that the Hatoyama administration, already doomed when the Times article appeared, was hunting for some positive press overseas to counteract the bad publicity they were getting at home for changing their tune on civil service reform. Members of the Japanese media are among the few that still take the New York Times seriously, and the DPJ probably hoped the story would filter back to Japan through the back door. The party could have easily fed the reporter the information in bite-sized chunks, made Mr. Haraguchi available for an interview, and even suggested tame professors for additional quotes.

If Martin Fackler’s still interested in this issue, by the way, I’d be happy to recommend a few books in Japanese to get him up to speed on what’s really happening. He should be able to find someone to read them and provide him with an English summary.

Of more pressing concern to the Japanese electorate, however, is the need for a reliable information source. The Yomiuri—the newspaper with the largest national circulation—obviously doesn’t meet those qualifications. Instead of selling journalism, they’re recording secretaries making their customers pay for mimeographs of ruling class PR handouts.

Meanwhile, what will Kan Naoto do now that he’s sold all the way out? Here’s a hint from the prime minister’s e-mail message distributed yesterday:

“The priority for me now is working to counteract the new social risk of isolation…Looking at the causes of suicide, very few people commit suicide because of poverty alone. They are poor and also don’t have any friends. They don’t have any family to turn to. The combination of isolation and poverty drives people to suicide.”

Leave it to a self-castrated political eunuch to make his priority a problem that politics will never solve.

Afterwords:

A long-time reader of the site is employed by a major Japanese mass media outlet. A few years ago, he wrote in to say that Karel van Wolferen adamantly refused to interact with anyone in Japanese when he was interviewed for a Japanese television program. Make of that what you will.

*****
Still the same old song, isn’t it?

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Letter bombs (14): Into the unknown

Posted by ampontan on Monday, January 17, 2011

NOBEL LAUREATE Friedrich Hayek once wrote, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

The first American to win the Nobel Prize in economics, Paul Samuelson, wrote during an economic crisis in the 1980s:

“What we know about the global financial crisis is that we don’t know very much…It would be reassuring and dramatic to declare that (officials in charge of economic matters) had succeeded. But the duller truth is that we don’t know — and neither do they.”

Finally, testifying before a congressional committee in the U.S. last year, George Mason University economist Russell Roberts said about the stimulus:

“There is no reliable way of knowing whether the stimulus package has averted a worse situation — or whether it’s part of the problem. There is no consensus in the economics profession on this question, and no empirical evidence that can settle the dispute.”

That should set the table for two articles that reader Marellus sent in, the conclusions of which couldn’t be more different.

The first is by Mike “Mish” Shedlock, who has a website called Mish’s Global Economic Trend Analysis. Mish riffs off of former Chief Cabinet Secretary Sengoku Yoshito’s statement earlier this month that the Japanese economy was “approaching the edge of a cliff”.

Mish added:

“The…statement “Japan is approaching the edge of a cliff” is a sure sign Japan has already fallen off a cliff. Politicians do not admit problems until it is too late to fix them. Thus, we have official admission that Japan’s demographic time bomb has just gone off. The only question now is how quickly the problem escalates.”

His argument is compelling, though he misses a golden opportunity here:

“Raising taxes in the midst of deflation hardly seems right, but the alternative is default or further escalation of government debt.”

There’s no mention anywhere of the alternative of either cutting government spending or not exacerbating the existing debt, which neither Democratic Party government in Japan has chosen to do. Indeed, the Hatoyama budget was the highest in Japanese history, and the initial proposals for the Kan budget for FY 2011 are slightly higher. They have added the enormous burden of child allowance payments, to cite one example, and failed to keep the fanciful promises they made for funding them when in opposition. Of course they knew the promises were counterfeit when they made them, but the idea of standing on the edge of the economic cliff didn’t bother them then.

Mr. Shedlock is properly scornful of the “government buffoons” and their Keynesian schemes, but overlooks that the current government, in its domestic policies, is just as far to the left as the Obama administration during its first two years in office, and for the same reasons. He also seems to be unaware that in Japan, fingers also point to the Finance Ministry and its enormous power to control policy. (To be fair, few people outside of Japan talk about it.) Higher taxes and a growing government are just dandy with them; it funnels even more power and control in their direction, as we’ve often pointed out here.

Curiously, John Butler writing for The Amphora Report looks at several of the same phenomena but sees something else entirely. He writes:

(T)his brings us to the most important point of all, which is to compare the entire Japanese economy, public and private, to those of the West. As a legacy of decades of large trade and current-account surpluses with the rest of the world, Japan has a cumulative net foreign credit position of some 57% of GDP, whereas the US and UK have net foreign debt positions of around 19% and 22%, respectively, with the euro-area roughly in balance. This is reflected in part in Japan’s large official foreign exchange reserves of just over $1tn, the bulk of which are held in the form of US Treasury securities. (The US and UK have essentially no foreign exchange reserves. The euro-area has some $200bn.) Now, why are these figures so important? Think about it: If you are approaching retirement, do you want to owe other people money, or do you want them to owe you? Japan may be an ageing society but it is an ageing society with a private sector that has saved prudently for retirement! Japan may have a huge government debt but it can service that debt for an extended period by gradually winding down its massive net foreign credit position.

He adds:

One objection that might be raised at this point is that perhaps, notwithstanding a large net foreign credit position, Japan’s private sector has nevertheless not saved enough to fully fund its demographic-driven future liabilities. Fair enough, in fact we would agree that it hasn’t. But please answer this: Who has?

And:

We’d much rather be in line to receive a fully-funded Japanese pension–despite the demographics–than a ponzi-style pay-as-you-go and hope-the-stock-market-always-rises western-style one!

Alas, the Kan government is now talking about pension reform, and one possible “reform” they’re considering is implementing that same Western Ponzi scheme pension plan. Perhaps that’s what they mean by “putting people first”.

He also makes the point that Japan would benefit more than other countries by raising the retirement age, first, because the normal retirement age is 60, and second, Japanese tend to live longer and healtheir lives than people in the West.

He concludes:

“We do sympathise with the (fictional) Mr Mizuno of our narrative above. He is perfectly justified in having some serious concerns about the future of his country. But it is the now-retiring baby boomers of the West who, in our minds, have reason to be outright terrified.”

Both Mr. Shedlock and Mr. Gibson focus on Japan’s infrastructure investments, but neither mentions that one of the DPJ’s campaign slogans in 2009 was to call for a shift “from concrete to people”. That, combined with the DPJ’s unwillingness to privatize anything–they’re backed by public sector unions, after all–would tend to postpone any benefits Mr. Gibson sees by selling off some of the public infrastructure.

And, as is usual among Western observers, neither man mentions that the Koizumi and Abe administrations managed to whittle the annual budget deficits from JPY 20 trillion + when Mr. Koizumi took office to JPY seven trillion when Mr. Abe left office. It is almost double that first figure in the current fiscal year under Mr. Hatoyama’s budget.

Those looking for any improvement with the current government should keep in mind that Mr. Hatoyama had two Finance Ministers: The first was Fujii Hirohisa, the former head of the Finance Ministry’s Budget Bureau (i.e., the paymaster for Big Government), and Kan Naoto himself. Mr. Kan is now the prime minister and Mr. Fujii has just been brought back into the Cabinet as the Deputy Chief Cabinet Secretary.

If the Japanese economy is on the edge of the cliff, it is because the LDP successors to Messrs. Koizumi and Abe reversed course, and the DPJ government decided it would be just tickety-boo to walk right up to the edge and see how far they could lean over.

Who has a better grasp of the real situation, Mr. Shedlock or Mr. Gibson?

The professors Samuelson, Hayek, and Roberts had the first word in this post, and it’s just as fitting to give them the last.

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Reflections on the revolution in Japan

Posted by ampontan on Saturday, June 5, 2010

Never attempt to fake reality in any manner.
– Ayn Rand

IT IS SURELY the most civilized revolution in human history.

This revolution is not a mass national spasm. No cars have been overturned in the streets and set afire by students to use as barricades from which to throw Molotov cocktails. No peasants have stormed the castle with torches and pitchforks. No dictators for life have been lined up against the wall and shot in the snow, no ears are being sliced off with machetes, and no rebels have been drawn and quartered as traitors.

The Czechs had a Velvet Revolution (called the Gentle Revolution by the Slovaks), but they also had mass demonstrations, riot police, secret police, general strikes, blacklists, armed forced on alert, and an imprisoned Vaclav Havel.

Apart from some shouting and sign-waving for a few days last month in Okinawa, Japan has been tranquil.

But it is a revolution nonetheless, an ongoing process similar in some ways to that foreseen by Jefferson, Marx, or Mao, and it has lasted for more than 20 years. There have been victories, defeats, ceasefires, lulls in the fighting, and setbacks suffered at the hands of counterrevolutionary revanchists.

That revolution claimed its latest victims last week. Prime Minister Hatoyama Yukio resigned and will leave the Diet when his term ends to retire as a de facto aristocrat to one of his well-appointed residences with his trophy wife alive and his family’s fortune intact. Yet his severed head was jammed on the end of a stake and paraded around the village green just as surely as Marie Antoinette’s thumped into a straw-filled box.

Courteous and clueless to the end, Mr. Hatoyama refused to step down until he goaded Secretary-General Ozawa Ichiro, a man whom other politicians and commentators have dubbed the fassho yaro (fascist bastard), to resign with him. He was not about to hand over the party financed by his mother’s money to a man the electorate and many politicians actively loathe.

All of this was achieved without the revolutionaries firing a shot. All they did was answer a few questions from a pollster once a month.

They would not see themselves as revolutionaries—most of them are pleasant, well-behaved, and would rather wear a t-shirt bearing the face of Hello Kitty than of Che Guevara—yet that is what they are. Though they take their time, in the end they take no prisoners.

Off with our heads: Messrs. Hatoyama and Ozawa seal the deal on the 2nd in Tokyo.

Now the revolution has entered a new phase that most people will only understand in retrospect. For the past two decades the enemy has been as identifiable as the British Redcoats. But Mr. Hatoyama and his Democratic Party slipped a costume over their crimson jackets; they wore the mantle of reformers. They promised a New Japan, and the electorate overcame its suspicions long enough to give them a chance.

This time, the terrible swift sword fell after little more than eight months because Mr. Hatoyama and his party betrayed the revolution. They neglected to take Ayn Rand’s advice about faking reality. It was not long before the people saw that the New Japan was a dead ringer for the Old Japan, and a lot uglier to boot. The people have now served notice that party label exempts no one from the guillotine.

When the Hatoyama Cabinet officially resigns, only four other Cabinets under the current Constitution will have been in office a shorter time. One of those prime ministers suffered a partial stroke, another was bounced for a sex scandal, and a third was a caretaker keeping the office open while Ozawa Ichiro tried to prevent the collapse of his first oil-and-water coalition after a real aristocrat, Hosokawa Morihiro, threw in the spoon. Mr. Hosokawa spent just one day more in office than did Hatoyama Yukio. The Socialists walked out on that coalition government too. Revolutions litter ironies of history in their wake.

*****
Though a supporter of some liberal and reform causes, Edmund Burke also claimed in Reflections on the French Revolution that governance by the elites of his day led to real social stability, and existing institutions represented the wisdom of humankind.

It is the contemporary version of those elites that the Japanese Revolution has been fighting for more than 20 years—the politicians who think it is the business of the people to serve the state, the bureaucrats who think it is their job “to make the politicians dance like monkeys”, and the Greek chorus in the media who work both sides of the barricades to play one side against the other.

The recent Tea Party movement in the United States is an expression of the same phenomenon, and even many in the American mass media, who consider themselves part of that elite, have been unable to kill it.

While Japanese do not hold aloft Don’t Tread on Me banners, it is fair to say they were the first in the advanced industrial nations to recognize and engage the enemy at the popular level. The voices in this civilized revolution can be subdued, however, and few in the self-absorbed West have either the linguistic knowledge to understand it or the interest to listen for it.

The English-language press is the last to place to look for bulletins from the front lines. The RSS feed chucked up a story by an analyst fretting about a policy vacuum in Japan in the wake of the O-Hato resignation. The author is apparently oblivious to the policy vacuum of the past three years, which turned into a policy black hole with the inauguration of the DPJ government.

Black hole is the only way to describe a party that offered a cut-and-paste election platform with a secret, small-print trap door in the back that veered sharply to the left—only to rewrite it less than a week after its debut and claim that it wasn’t the real platform to begin with. Black hole is the only way to describe the continuous Who Struck John Cabinet bickering in public over every matter of importance, the backtracking on every campaign promise, most notably at the insistence of puppetmaster Ozawa Ichiro in December, and the six months of daily disarray over the Futenma airbase.

Hiroko Tabuchi in the International Herald Tribune was technically correct when she said Mr. Hatoyama’s polls “dipped” after his Futenma decision. Falling to 19% at the end of May isn’t really a plunge when you’re at 23% in mid-April.

Still others said that his resignation was forced because of the Futenma decision. It’s also technically correct to enter “lung cancer” on a line in a death certificate, even though the real cause of death was 30 years of chain smoking.

Less than a week before the Hatoyama resignation Gunma Gov. Osawa Masa’aki was asked his impressions of the prime minister after attending a meeting of the National Governors Council on 27 May requested by Mr. Hatoyama to discuss the transfer of Futenma functions to other locations in Japan:

He said it was his understanding that not only the Marines, but all American troops on Okinawa, maintained the deterrence. But the effect of that deterrence was not explained at all…There was no meaning at all in attending the Governors Conference…I have no idea what the conference was for.

He concluded:

I am saddened that a person such as this is responsible for the defense of Japan, and is (serving) at this level.

*****
A mere month after taking office, former Finance Minister Fujii Hirohisa asserted during a live television interview that there was nothing wrong with making campaign promises they had no intention of keeping. The people would judge them on the percentage of the ones they did manage to keep.

Mr. Fujii became the first Menshevik to be executed less than three months later. After a career in the Finance Ministry’s Budget Bureau, he actually knew something about economic matters, and he objected to the budget the party expected him to take responsibility for. It’s not often that people can break records in their first attempt, but the DPJ Cabinet did. It’s the highest budget in Japanese history, with the largest deficit, and funded by the greatest float of deficit-financing bonds. It ignited a national conversation in which the Japanese began asking themselves if they would go the way of Greece.

Sengoku Yoshito, the Minister for Civil Service Reform and National Policy, even suggested that it would be no surprise if investors sold Japan short.

That was just four months after Mr. Hatoyama denounced the stupidity of budgets based on deficit-financing bonds in a campaign speech.

Meanwhile, Mr. Fujii’s political execution was ordered by Ozawa Ichiro, even though they had long been friends and the former was the secretary-general of the now defunct Liberal Party when the latter was its head. Revolutions also litter betrayals in their wake.

To prevent anything like economic expertise from getting in the way, Mr. Fujii was replaced as finance minister by Kan Naoto, whose chief qualification was that he had no economic expertise at all. Well, that’s not true. He did admit to reading 10 pages of Paul Samuelson’s Economics before putting it down for good.

As of yesterday, Mr. Kan is the new prime minister.

Meanwhile, in his last Cabinet E-mail message distributed yesterday, Mr. Hatoyama wrote:

We were able to pass budgets that are for the people.

*****
The rubble is so deep and the anger and dismay so palpable that it prevents some Japanese from seeing there’s much more silver lining than cloud.

Said Ito Atsuo, a pro-DPJ, anti-Ozawa journalist:

The people had the impression that they were the same as the LDP after all. The people have already gone past the point of disappointment in politics to hopelessness. The DPJ caused that to happen, and for that they bear a heavy responsibility.

They will likely conclude that the timing for the decision to quit was based on an analysis of the circumstances for the upper house election, which are worse than expected. It’s clear to the people that this resignation drama was staged with the election in mind. The election will probably go badly for them. In the end, it was nothing more than a “New LDP” with Secretary-General Ozawa running the show. Mr. Hatoyama had probably reached his limit too, but my patience had run out.

Said novelist Takamura Kaoru:

When the government was inaugurated, I expected a new political mechanism for Japan, in which the politicians (rather than the bureaucrats) led. But once the lid was opened, they regressed on expressways and Japan Post, and no progress has been made on reforming the civil service system.

TV Commentator Tahara Soichiro was short and to the point:

DPJ! Give me back my vote!

Said Sakurada Jun of Toyo Gakuen University, a conservative who enjoys bashing other conservatives:

We’re already beyond the point at which we can write this off as being the result of Prime Minister Hatoyama’s statements, behavior, or temperament as an individual. We’ve reached the point at which this should be seen as a crisis for Japanese politics as a whole.

It may be a crisis for Japanese politicians, but it’s a success for Japanese democracy. The people have pulled off another bloodless coup.

*****
This revolution is televised, unlike the one in Gil Scott-Heron’s proto-rap fantasy. One network conducted people-in-the-street interviews the morning after the resignation. The program host began the broadcast by saying Mr. Hatoyama’s resignation was sudden—despite it being the subject of daily speculation since last December.

Every one of the people interviewed made comments to the effect that “of course” he should have quit, and most wanted him gone long ago. Only one middle-aged woman disagreed. She wanted him to stay in office.

Taken aback, the interviewer asked her why:

So he could have gone through the election and we would have made him take responsibility. Then he could have quit.

Back in the studio, the program’s hosts again talked about what a surprise the resignation was.

I turned the program off unwatched. Why waste time with TV journalists who can’t spot a revolution when they see one, even after they choose which filmed interviews to run?

*****
The overall level of DPJ awareness is roughly on a par with that of the House of Romanov, whose fate they’ll share if they don’t wise up soon. Those who bet on form have a good idea where to place their money.

Aso Taro, the previous beheaded aristocrat, at least had the character to face the people in an election. Mr. Hatoyama didn’t even have the nerve to hold a news conference announcing his resignation. He called a party conference and subjected everyone to a teary speech.

The people gradually stopped listening. This was brought about by my lack of virtue.

More than a few in Japan thought that was insulting. It struck them as if the prime minister had said, we’ve been doing the right thing all along, but you just wouldn’t pay attention. Mr. Hatoyama used that phrase five times on the day he resigned.

An American wouldn’t be surprised. They’re used to the snotty condescension of faux elites. One of those elites even wrote a book about it: What’s the matter with Kansas? What he meant was, What’s the matter with Kansas for being too stupid to understand their real interests, shunning the left and voting for the right, which he dismissed as “deranged” and “deluded”.

In another part of his resignation speech, Mr. Hatoyama said:

It is important that the DPJ give the impression that it has changed and become clean. This will depend on the method of selecting the new party head, and the type of person selected to be party head.

Yes, “impression” is the word he used instead of saying that the party should actually change. The man who said the party should have a clean image is the same man who insisted he was keppaku, i.e., pure, even though he had to pay the equivalent of six million dollars in back taxes on cash received from his mother for his political finance committee, which his aides claimed were donations from people that turned out to be dead. He used the same word to describe Ozawa Ichiro, who took 90 pounds avoirdupois of cash from his safe at home and gave it to an aide to buy real estate for his political finance committee. Between the two, they have seven aides who will be prosecuted for financial irregularities.

******
In April, Ito Atsuo said he thought Hatoyama Yukio’s replacement would be Kan Naoto, and added the proviso: “If Mr. Ozawa retains his influence within the party”.

So much for choosing the new party head to present a clean image. Mr. Kan was selected as the new prime minister on Friday afternoon against token opposition. It was done quickly; no one in the party wanted an election with a debate that would highlight its internal contradictions, structural weakness, and sharp policy disagreements.

Head of the recently formed Spirit of Japan Party, Yamada Hiroshi, spoke for many when he said:

Whoever becomes prime minister, it’s nothing more than changing the cover on a book. Mr. Kan personifies the nature of the Democratic Party. There is unlikely to be any change.

In addition to being finance minister, Mr. Kan has been the Deputy Prime Minister. One might think he should be held equally as responsible as Mr. Hatoyama, but not in the DPJ.

Mr. Kan has been serving as finance minister since January with no discernable qualifications other than the ability to distinguish the numbers on the different banknotes and to read Finance Ministry crib sheets without stuttering.

It’s easy to guess on which side of the barricades he’s fighting:

Bringing about the second Keynesian revolution will enable us to break free of the economic stagnation of the past 20 years. It is important for us to circulate money.

He likes this idea a lot. He also likes the simile that deflation is caused by a lack of blood flowing in the economic veins, and that taxes have to be used in the same way as a pacemaker or artificial heart to force the blood to flow again and promote fiscal activity. He doesn’t seem to realize that government behavior caused the coronary arrest to begin with.

He very much likes the idea of tax increases and says they will benefit the economy “if they’re used properly”. On several occasions, he’s insisted: “The economy will improve even with a tax increase.”

What can you expect? It’s not as if he can stand up there and say we know how to spend your money better than you do, is it? Still, it gets almost that bad.

Now, the citizen’s tax burden is somewhat lighter compared to other advanced countries, and there is room for an additional burden…but in the expression citizen’s tax burden, I think we should stop using the word burden and replace it with share, or allotment. In short, the negative impression of the word burden is extremely strong, so instead of that, (we should use) allotment.

Here’s Mr. Kan answering a question at a press conference about why he wants to have a debate on the Japanese tax system:

(According to a panel of experts), the so-called income redistribution function of the income tax today has largely declined…
We should have people with a lot of income pay a little more in taxes and allocate it for those people rearing children as a family subsidy. I want to begin a serious debate about a tax system of that sort.

He added:

The system of progressive taxation was eased, and that resulted in tax reductions for the rich.

Rather than channeling Barack Obama, he’s being tutored by a Keynesian named Ono Yoshiyasu who denies the influence of the multiplier effect. That explains why Mr. Kan admitted earlier this year he had never heard of the multiplier effect.

Morituri te salutant

On his Japanese-language blog, university professor and author Ikeda Nobuo pointed out that Mr. Kan’s political thinking has changed little since his university days. He characterized this philosophy as class warfare based on the concept that “Capitalists exploit the workers.” Prof. Ikeda also wrote of Mr. Kan: “His incomprehensible slogan of ‘From the supply side to the demand side’ is easily understood if read as ‘From the capitalists to the workers’.” He said that Mr. Kan has never brought up for discussion anything resembling a growth policy in his career; his interest is in income redistribution.

After all that dismal science, it’s time for some comic relief. One blogger actually wrote this (in English) about Mr. Kan’s selection as prime minister:

That should be reassuring to financial market players. Naoto Kan…has emerged as a fiscal conservative; he should have an immediate, positive effect.

If you think that’s funny, get a load of this one: He wants people to hire him as a political pundit.

After his selection as prime minister, Mr. Kan said:

We’ll try one more time to have the people understand the budget.

Translation: We’re going to keep repeating the same excuses for raising taxes and re-centralizing the government until the light goes on for you knuckledraggers.

*****
As Mr. Hatoyama did before him, Mr. Kan tried to create the impression that his would not be an Ozawa puppet administration. He said:

It would be better if Ozawa Ichiro were quiet for a while.

What most people would like to hear instead of “quiet for awhile” is “out of the party”, or better still, “out of the Diet”, but why would he say that? Mr. Kan has headed the DPJ before, and it was during his previous term that the party merged with the Ozawa Ichiro-led Liberal Party. He just wants The Boss to lay low until things blow over. You know the script–we’ve all seen the Grade B gangster movies.

Mr. Ozawa doesn’t need a teleprompter to read his lines, either. In fact, he anticipated Mr. Kan’s suggestion. Prompted a reporter at his last news conference:

When you were in the opposition, you said that if the prime ministers were changed once a year, the Diet should be dissolved and a general election held to gauge the popular will.

Mr. Ozawa replied:

I’m no longer the secretary-general. When the party president resigns, I no longer have a position. I just provide continuity for the new system. Ask again after the new system is in place.

Few are saying so openly, but the real reasons Mr. Kan was selected—other than the gold-watch-for-services-rendered aspect—were that he’s the consensus choice to be trusted not to drive the car into the ditch between now and the July election, and that he is disposable. Besides, who else with serious ambitions in the party wants to drink of the poisoned chalice now?

DPJ lower house member Tanaka Makiko, daughter of the alchemist who showed Ozawa Ichiro how to turn excrement into money and votes, summed it up nicely when reporters asked her about a rather small boomlet (generated by Mr. Ozawa himself) supporting her for party president/prime minister.

It’s an honor, but this Cabinet is just to manage affairs before the election, so I declined.

What she didn’t tell reporters was that over the course of a conversation with Mr. Ozawa that lasted several hours, she told him she’d be up for the job after the upper house election. At that point, Mr. Ozawa lost interest.

In other words, everyone knows that a stake with Mr. Kan’s name tag on it has already been sharpened and leaned up against the wall in the barn. It’s even money that he won’t last as long in office as Mr. Hatoyama.

****
What have these raccoon dogs from the same hole, as the Japanese have it, been doing with the real business of government while the media has focused the public’s attention on the dramas with Mr. Hatoyama and Fukushima Mizuho?

The recent events have sharply cut the time available for passing the bill that would essentially renationalize Japan Post, as well as its savings accounts and life insurance systems. That presents the party with a problem. To have the upper house pass it now means that they would have to eliminate any hearings or debate and rubber stamp it through before the end of the Diet session. They already know what the public and the mass media will think of that. Failure to pass the legislation now would cause trouble for the party with their remaining coalition partner, Kamei Shizuka’s People’s New Party. They’re a single-issue party, and this issue is it. It would also create problems with their supporters in the Japan Postal Group Union, whose 230,000 members make them the country’s largest single union.

Said the union chief at a news conference:

We want them to pass the bill as quickly as possible. The legislation includes the union’s request that we reexamine (i.e. kill) privatization.

Your Party Secretary-General Eda Kenji addressed this on his website:

“There’s been little coverage due to the uproar over the departure of the SDPJ from the coalition, but the ruling DPJ has steamrolled a series of measures through the Diet. Their iron-fisted conduct of Diet affairs is extremely irregular.

“Last Friday, the bill reversing the privatization of Japan Post was rammed through (the lower house) after only six hours of debate. For legislation of this importance, it’s a matter of course to hold public hearings to hear the opinions of experts and to ask questions of witnesses. The ruling party, however, ignored it all and cut off debate. This whole reason is to conduct affairs in the Diet by giving priority to elections. They want the votes of the people affiliated with Japan Post and will do anything to pass the legislation before the election….

“We of Your Party used to think there was no difference between the LDP and the DPJ, but we’ve run out of patience with this suppression of debate through the violence of numbers…if this is unchecked, it will continue to escalate. That’s the reason we’ve begun to work in concert with other opposition parties. But the Ozawa-Yamaoka ‘Out of the way, out of the way, a great horse is coming’ style of handling Diet affairs is a crime based on the belief of the rightness of their conduct that can’t be prevented by joint opposition party action alone.

“There have been uncountable betrayals of the people by DPJ politics after taking power. To conduct Diet affairs in such a despotic manner far worse than the LDP after having so severely abused the LDP when they were in the opposition is one such betrayal.”

Notice the symptoms Mr. Eda cites: operating government only for the purpose of winning elections, an attitude that they alone are right…Where have we seen that before?

Note also his use of the word betrayal. This afternoon on television a news program ran a clip from a speech by Edano Yukio, who it appears will be named the new party secretary-general. The first words out of his mouth were, “I know you all think we’ve stabbed you in the back…” How would you like to use that as a stump speech with an election five weeks away? We’re not in “bait and switch” territory any more, Toto.

Fellow Your Party member Yamauchi Koichi provided a list of the measures the DPJ has already fisted through.

12 March: Eliminating tuition for high school students / Education Committee
12 March: Child allowance bill / Health and Welfare Committee
14 April: Health insurance law / Health and Welfare Committee
12 May: Public Employee Law / Cabinet Committee
12 May: Law promoting use of energy saving products / METI Committee
14 May: Bill for basic measures to prevent global warming / Environment Committee
24 May: Bill for basic measures on election expenses / Special committee for ethical elections
25 May: Broadcast law / Internal Affairs and Communications Committee
26 May: North Korean-related legislation regarding foreign exchange and exports / METI Committee

Those who bet on form already have an idea what the DPJ will do.

****
Yamaoka Kenji of the DPJ is Chairman of the Diet Affairs Committee and Ozawa Ichiro’s closest political associate. If Mr. Ozawa is a fassho yaro, then Mr. Yamaoka is the head of his Sturmabteilung. He wrote in Nikkei Shimbun on the 28th:

It might be a fact that there was a time in professional wrestling when the matches were fixed. But after we became the party in power, it’s been a gachinko Diet.

Gachinko is a term from sumo that means a match conducted in earnest, rather than a practice bout or one whose outcome has been scripted.

Mr. and Mrs. Hatoyama eat the sun every morning for breakfast. Mr. Yamaoka eats brass.

This angered professional wrester Sakata Wataru, one of the Hustle Brothers. He issued a statement the next day.

I cannot overlook this insulting statement. Please stop by the Korakuen Hall any time you like from 12:00 p.m. to 2:00 p.m. tomorrow. As a voter, I would like to ask you just what your definition of a fixed professional wrestling match is.

Ah, Mr. Sakata, we already know that definition.

Ozawa ally Kenko Matsuki, the senior vice chair of the diet affairs committee—in other words, Mr. Yamaoka’s number two at the SA, told a group of reporters two days before the DPJ tapped Kan Naoto:

We will decide who the next prime minister will be. After we’ve decided, we’ll have him obey us. (従ってもらう).

Yes, that is a direct quote.

Here’s the definition of a fixed professional wrestling match: An election for the presidency of the Democratic Party of Japan.

*****
People never get a second chance to make a first impression, and the Democratic Party has shown its true colors in the brightest of pigments. The electorate now understands it can ignore the party’s words and focus on its deeds. What the DPJ has accomplished in its first attempt at forming a government is nothing less than to have pitched their tents on the wrong side of the barricades in the ongoing revolution. As Daniel Hannan of Britain has said in a different context, you are the reactionaries now, comrades, and we are the revolutionaries.

People are beginning to realize that the Bismarckian welfare state is no longer practical, much less philosophically defensible, and that there is an acid test to determine the political gold from the base metals. The concepts of kanson mimpi (up with the state, down with the people), rule by an elite whose membership is determined by success on a university entrance examination, Keynesian sugar highs bought with other people’s money, Nanny-state meddling, and an electorate too stupid to listen to the explanations of its betters are the counterfeits. The real currency is a small central government, devolution of authority, eliminating money of the mind, privatization, and allowing people to behave as they will as long as they don’t scare the horses or trample the flower beds. It stays hard when bitten, and it’s legal tender everywhere.

The political and governmental elites are the last everywhere to understand this, because it is in their interest not to understand it. We can only shrug. It’s their necks.

¡Viva la Revolución!

Afterwords:

Eda Kenji used the phrase, “Out of the way, out of the way, a great horse is coming” to describe the DPJ’s conduct of Diet affairs. That’s a haiku written by Kobayashi Issa.

It is surely the most civilized revolution in human history.

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Posted in Business, finance and the economy, Government, Politics | Tagged: , , , , , | 4 Comments »

Nothing more expensive than free tollroads

Posted by ampontan on Friday, April 9, 2010

LAST OCTOBER, a month after the Democratic Party of Japan formed a new government, then-Finance Minister Fujii Hirohisa appeared on a Sunday political blabathon to do something rare for a politician. He blandly asserted it was just copacetic for the party to make extravagant election campaign promises and then switch the chicken in every pot for a sparrow once they wound up in office. He suggested the DPJ government would be able to run in the next election on whatever it did manage to accomplish.

At least they’re going to kiss the electorate first before they…well, you get the idea.

This from a party that blew its own horn more often than the members of a national high school brass band competition for bringing manifestoes/political platforms to the forefront of Japanese election campaigns.

Someone seems to have muted those horns over the past six months.

Here’s another one they forgot to bring the musical score for: Eliminating the tolls on public expressways. The Ministry of Land, Infrastructure, and Transport released its new toll schedule today. Yes, drivers will still have to pay as they go.

  • A maximum toll of JPY 1,000 (about $US 10.73) had been in force for holidays. Sayonara and Via con Dios, baby. Now the upper limit is JPY 1,000 for minicars, JPY 2,000 for regular automobiles, JPY 5,000 for larger automobiles, and JPY 10,000 for very large vehicles (i.e., big trucks, buses, cement trucks, et al.) every day of the week.

As the result of earlier privatization measures, some expressways now offer a 50% discount during morning and evening commute hours. Those will all be wiped out too–an elimination of highway tolls in reverse.

  • Fuel efficient eco-cars that get more than 20 kilometers to the liter will be charged the same rate as minicars.
  • The rate for the Honshu-Shikoku Bridge Expressway will be a maximum of JPY 2,000 for minicars and JPY 3,000 for regular vehicles, in consideration of the competing ferry service.

The change upset Tokushima Gov. Iizumi Kamon, who had asked the government to keep the tolls on this road identical to the others. At a news conference, he said:

I’ve gone beyond anger to being filled with disappointment…Why should only Shikoku be subject to discrimination?

Mr. Iizumi thinks this will reduce tourism to his prefecture and have a negative impact on the distribution industry.

  • The fees will be based on distance traveled for the Metropolitan Expressway in Tokyo and the Hanshin Expressway in the Kansai region. The tolls for regular vehicles will be from JPY 500 to JPY 900, and up to JPY 1,800 for large vehicles. The cost of using these highways is now uniform.

Hanshin Expressway entrance in Kobe

Most of the tolls will take effect in June, but the discounts for eco-cars will begin in July. The starting date for the new fees for the Metro and Hanshin Expressways has not been settled, but is expected to be near yearend.

To be fair, they will partially keep their promise. Fifty segments of 37 highways nationwide will now be free, covering 1,620 kilometers. That accounts for 18% of the total. Hey, come on, they’ve got an upper house election to contest this summer. They’ve got to be able to campaign on something.

It might be a profitable exercise for a journalist to match up the free expressway areas with electoral districts to see if there’s a connection. You can be sure the DPJ did.

The government is now calling this a “social trial”, a term that could be equally applied to the government itself as well as the ordeal of the citizens. This plan is going to hit the budget for only JPY 100 billion in lost revenue, instead of the originally estimated JPY 600 billion had they kept their campaign promise.

An informal net survey of about 1,800 people produced the following responses.

Q: Are they breaking a campaign promise?
Yes: 83%
No: 17%

Q: Will they be able to make all expressways free by 2012?
Yes: 4%
No: 96%

Most interesting of all:

Q: Should they rescind the policy of eliminating tolls?
Yes: 81%
No: 19%

Maybe if we’re lucky, the political platform of the next government won’t be written in disappearing ink.

Posted in Government, Politics | Tagged: , , , | 4 Comments »

The best intentions and naïveté make a bad combination

Posted by ampontan on Friday, February 12, 2010

AFTER the political fund-raising scandals of the 1990s, the nation’s political class finally decided it was time to take a stab at reform. They instituted a measure in which public funds would be provided to political parties, with a party defined as having five national legislators. The amount of money granted would be in proportion to the number of seats members held in both houses of the Diet.

Theoretically, this was supposed to allow politicians to conduct the nation’s business without having to sell out to the monied interests, including Big Business, Big Labor, and Big Religion.

That the theory would fall apart the moment it was exposed to reality should have been obvious at the time. The political class will always find a way to sell out to monied interests, and they incorporated in this new system the added advantage of a safety net (or pre-emptive unemployment insurance benefits). Now they have access to a 24/7 ATM dispensing other people’s money without having to ask for it first. They won’t have to cut any deals in quiet, well-appointed offices to get it either.

That it blasphemes the implied compact between the governors and the governed is obvious on its face. That it is a mechanism favoring incumbents goes without saying.

That the recipients of the money abuse the privilege is now public knowledge.

One of the provisions of this law is that political parties are supposed to return the public funds to the national treasury when they disband.

The Nishinippon Shimbun reports today that 17 political parties have closed up shop and taken down the bunting since the measure was instituted. How many of them have returned the public funds in accordance with the law?

Ha ha ha ha ha!

The members of nine of the parties donated all the public money to political groups, leaving a balance of zero.

The members of the remaining eight bequeathed the taxpayers’ funds to their successor parties.

One party in the former group was the Liberal Party, headed by Ozawa Ichiro.

Odd how his name keeps popping up in stories about the misuse of political funds, isn’t it?

The party donated JPY 560 million (more than $US 1.7 million) to the People’s Reform Council, a group that the newspaper drily noted “has close connections with Mr. Ozawa”. The remainder was allocated to another Ozawa-affiliated group that used it for operating expenses.

There are widespread suspicions that much of the cash wound up in the home safe of Ozawa Ichiro with the assistance of former Finance Minister Fujii Hirohisa. He was the Liberal Party’s secretary-general at the time.

The Shinto Yuai managed to pull off a double when it merged with the Democratic Party of Japan. They funneled about JPY 326 million to the DPJ, and donated JPY 1.06 billion to an affiliated group, the Yuai Association, on the day they disbanded.

The Liberal Democratic Party and New Komeito have introduced legislation to forbid parties that file the intent to dissolve from donating money to political groups. Everyone recognizes that would be difficult to enforce, however, because the parties could donate the money before making their official notification.

Instead of allowing them to reach into our wallets without asking, wouldn’t this be a better solution to the problem?

Posted in Government, Politics | Tagged: , , | 1 Comment »

The sick man of Northeast Asia

Posted by ampontan on Monday, January 11, 2010

It is terrible to contemplate how few politicians are hanged.
– G.K. Chesterton

THE SICK MAN OF EUROPE was a phrase applied to the Ottoman Empire in the mid-19th century after it had lost most of its territory and fallen under the financial control of the European powers. The description was so apt that it permanently entered the political lexicon. It was later employed to describe Great Britain in the late 1970s, a time of long, unexplained power blackouts, uncollected garbage in the streets, and governments that seemed to have less real power than labor unions.

Journalists and political commentators have recently put the expression to use for Germany, Greece, and Italy. The Economist of Great Britain thought it was a fitting way to characterize business and governmental conditions in Italy in 2005, even while emphasizing that the country still appeared to be quite a pleasant place to live.

Japan hasn’t succumbed to illness yet, but the venality, incompetence, and disregard of the public interest by the government (including the new “reformers”), the bureaucracy, and big business have so weakened the national constitution that it seems the only medicine effective to prevent the country from becoming the Sick Man of Northeast Asia would be large and repeated doses of electoral antibiotics by the public.

The story of last week’s resignation of Fujii Hirohisa from his post as Finance Minister contains the elements of all these bacilli as if they had been cultured in a single Petri dish.

The sick man of the Cabinet

Mr. Fujii said that he resigned his position barely four months after being sworn in because of his health. He is 77 years old and had already retired from politics once in 2005 after losing his lower house seat in the September election that year, though he said at the time his retirement was due to age. Mr. Fujii returned to the Diet as a replacement in 2007 for a proportional representation seat.

Fujii Hirohisa

No one in the country believes for a minute the story about his health. The conventional wisdom is that he was forced out by Democratic Party of Japan Secretary-General Ozawa Ichiro, who it is now clear has the ultimate authority in government. The breaking point, say the pundits, came when Mr. Fujii supported Prime Minister Hatoyama Yukio’s plan to cut the “temporary” surtax on gasoline, which the DPJ had tried to use as a wedge issue against the ruling Liberal Democratic Party when the former were still in the opposition. A veteran of the Finance Ministry, Mr. Fujii might have been inclined to keep the tax to help pay for the promises in the DPJ platform, but he chose to back the prime minister instead.

Mr. Ozawa, as party head, insisted that the tax be maintained despite the platform pledge to eliminate it, and his word is about to become law. Mr. Hatoyama looked every inch the humiliated schoolboy at a press conference last month when he told the public he was reneging on his promise, though he tried to save face by saying the tax would be converted to a different form. At that point, Mr. Fujii threw in the spoon, which is what the Japanese toss instead of towels when they give up.

The background

The real story may be even more disturbing. Before we get to that, however, here’s the background information critical for a clearer view of the picture.

* Mr. Fujii started his career in the Ministry of Finance. He retired after reaching the post of Budget Examiner in the MOF’s Budget Bureau in 1976. The MOF is the most powerful of the Japanese bureaucracies in the country’s government-within-a-government. The Budget Bureau was the entity that oversaw the dog-and-pony show that was billed as the new DPJ government’s review of unnecessary government programs conducted to great media hoopla last fall in a Tokyo gym. (The Budget Bureau chose the programs to be reviewed and issued recommendations to all the participants on the steps to be taken.)

* After leaving the MOF, he joined the LDP and was elected to the upper house. He later switched to the lower house.

* Leaving the LDP in 1993, he helped Ozawa Ichiro form the Japan Renewal Party that same year. Most of his subsequent political activity has been in partnership with Mr. Ozawa. He has been described as one of the latter’s closest advisors and confidantes.

* He served as Finance Minister in the short-lived Hosokawa and Hata governments in 1994, which were also puppetized behind the scenes by an ill-concealed Mr. Ozawa.

* He has since moved through several other parties with Mr. Ozawa, including the Liberal Party, which was part of the ruling coalition in the late 1990s. Mr. Fujii served as the secretary-general of the Liberal Party, as well as that of the DPJ when current Foreign Minister Okada Katsuya was party head.

* When Mr. Ozawa’s chief aide was arrested for a fund-raising scandal last year, eventually forcing his boss’s resignation as party leader, Mr. Fujii was initially one of his comrade’s most ardent defenders. It soon became clear, however, that keeping Mr. Ozawa as party leader would jeopardize the DPJ’s success in the election that had to be held by October. But Mr. Ozawa’s positions on personal loyalty and party discipline closely resemble those of Genghis Khan, and that meant the younger party members who wanted him gone were fearful of speaking out. Finally, Mr. Fujii decided to take the heat on himself and spoke in their place by calling for the party leader to resign. As far as Mr. Ozawa was concerned, that ended their close political alliance of the past two decades.

What really happened?

Political journalist and commentator Itagaki Eiken tells an entirely different story about the Fujii resignation. It is important to know that Mr. Itagaki does not hide his support for the DPJ.

First, claims Mr. Itagaki, the finance minister did have some health problems, but the primary one was not the official story of fatigue and high blood pressure. Rather, it was that Mr. Fujii drinks too much. He is known to have a taste for liquor, and Mr. Itagaki passed along the information that the minister carried a personal stash on his official government car for an occasional snort of Sneakin’ Pete to help him make it through the day. Apparently his consumption rose as the pressure mounted to come up with a workable budget for a heavily indebted country ruled by a new, redistributionist left-wing government under the thumb of Ozawa Ichiro, whose only policy principle is the lavish distribution of pork to achieve and keep political power.

Mr. Itagaki is unsympathetic and thinks that if Mr. Fujii has any health problems, he got what was coming to him.

The point of contention

In an effort to smash the ties between MPs who have long acted as de facto lobbyists for the bureaucracy, Ozawa Ichiro last year created a new organization under the office of the DPJ Secretary-General—in other words, under his control. The organization has become the sole body for receiving and evaluating budgetary requests of the national government from industry groups and sub-national governments. Requests made through the bureaucracy or through national legislators will no longer be honored, at least in theory. In other words, the people who want government money will have to ask the party and not the government.

Mr. Ozawa also made it known that support of the groups or local governments for the DPJ will be an important factor in the determination of whether those requests will be granted.

Here’s an example of what that means. Miyazaki Prefecture Gov. Higashikokubaru Hideo (and his predecessors) have long complained that economic development in his prefecture has been hobbled by the government’s failure to build a local expressway system. Transportation access to the largely rural Miyazaki is difficult. The governor even held a public debate with DPJ heavyweight Kan Naoto (who replaced Mr. Fujii as finance minister) about government public works projects when the DPJ was in the opposition, and the condition of the debate was that Mr. Kan visit Miyazaki to see for himself. He did, and he agreed that Miyazaki needed an expressway. He said it was the LDP’s fault. The debate was later held in Tokyo. Of all the media outlets, only the Sankei Shimbun saw fit to publish a verbatim record of the debate in its entirety on its website.

But Mr. Higashikokubaru nearly ran for the Diet himself last year as part of the LDP’s reform wing before choosing to finish his first term as governor.

As a result, the construction of an expressway to promote economic development in Miyazaki will have to wait a while longer.

Reversion to type?

On 9 December last year, Mr. Fujii met at a Tokyo hotel with Mitarai Fujio, the chairman of Keidanren, or the Japanese Business Federation. Its membership consists largely of companies listed on the First Section of the Tokyo Stock Exchange. Mr. Mitarai himself is a past president of Canon. The federation is known as one the three most important groups in the country that represent the interests of Big Business with Big Government.

During the meeting, Mr. Mitarai asked Mr. Fujii that certain preferential tax breaks for business be maintained, and the finance minister agreed. When Mr. Ozawa heard about the agreement, he hit the roof.

Mr. Itagaki refers to the agreement as “careless stupidity” that “benefitted the enemy”. He asserts that Mr. Fujii should have known better because of his long and close association with Mr. Ozawa. Was Mr. Fujii reverting to the bad old days to maintain the ties between the Finance Ministry and Big Business, he asked. Did age and fatigue impair his judgment? Did he have one too many in the back seat on the ride over to the Tokyo hotel?

Mr. Itagaki is just as livid as Mr. Ozawa. He believes that Mr. Fujii has irreparably stained his entire career in government by this one act. He is also contemptuous of Keidanren for not building closer ties with the DPJ, not donating more money to them, and for not falling into line and taking their marching orders from the New Shogun.

Given the journalist’s close ties to the DPJ, it is entirely possible that sources close to Mr. Ozawa fed him this dirt. Mr. Ozawa seems more than capable of splattering mud on the reputation of a long and reliable ally who in the end put principle above personal loyalty. Indeed, he’s even capable of spreading false rumors to gain his measure of childish revenge. But while Mr. Itagaki left in his text the smallest of escape clauses for the alcohol insinuation, he described the meeting between the finance minister and the Keidanren boss with no qualifiers whatsoever.

The replacement

Mr. Hatoyama spent a day trying to convince Mr. Fujii to stay on before giving up. Perhaps the latter decided that discretion was the better part of valor and a better opportunity to stay at home and have a quiet drink in peace. The new finance minister is Kan Naoto, one of the founding members of the DPJ and the man touted as most likely to replace the prime minister sometime this year. (Some people have said as early as this month, but the more sober types think it will be in May.) Mr. Kan is not known as a closet drinker, though it does sometimes seem as if he is nursing a hangover when he speaks in public.

The Economics Whiz

It is a long tradition in Japanese politics for prospective prime ministers to serve as finance ministers for at least a few months to give them a perfunctory idea of how an economy is supposed to function. This is doubly important for Mr. Kan, who as a de facto socialist/left-leaning social democrat is hazy on these matters.

He first became involved in electoral politics with the Socialist Democratic Federation, a group that existed from 1978 to 1994, when its membership split up to join other parties that eventually became part of the DPJ. The SDF was founded under the leadership of Eda Saburo as a splinter group from the old Socialist Party. His son, Eda Satsuki, was the head of a socialist organization in his youth, later joined the DPJ, and is now the president of the upper house, a position that required him to nominally resign his party affiliation.

College professor, author, and blogger Ikeda Nobuo points out that Mr. Kan’s political thinking is colored by a reddish hue and that his ideas have changed little since his university days. He characterized this philosophy as class warfare based on the concept that “Capitalists exploit the workers.” Prof. Ikeda also wrote of Mr. Kan: “His incomprehensible slogan of ‘From the supply side to the demand side’ is easily understood if read as ‘From the capitalists to the workers’.” He notes that Mr. Kan has never offered anything resembling a growth policy in his life; his interest is in income redistribution.

Mr. Kan, however, thinks he has an excellent grasp of economics, and has been holding public debates with Koizumi Jun’ichiro’s former Finance Minister and privatization guru Takenaka Heizo. On his website, Mr. Kan boasts that most economists agree that he comes out on top in those contests.

First day on the job

Unfortunately, Mr. Kan’s knowledge did not include the reticence of finance ministers the world over from making specific statements about exchange rates. People with his worldview still haven’t grasped the principle that the value of any object, including money, is determined by what people are willing to pay for it and not what the government thinks it should be worth. During a press conference on his first day on the job, Mr. Kan said he thought the yen needed to depreciate further against the dollar and helpfully suggested a range in the mid-90s. He added:

“I will consider the impact of exchange rates on the economy, cooperate with the Bank of Japan, and strive to (bring the yen) to an appropriate level.”

This comes from the same party that insisted on a strict segregation of monetary and fiscal policy when they were in the opposition, and absolutely refused to allow ex-MOF officials to be appointed to positions of authority in the BOJ.

His comments so roiled international currency markets that Prime Minister Hatoyama had to reassure them the next morning that exchange rate levels should be left to the markets:

“Basically, as the government, I, at the least, should not refer to exchange rates (sic). The idea is that basically, those statements should be made by business and financial circles…it is desirable for exchange rates to be stable. Extreme volatility is not desirable.”

He magically got Mr. Kan to change his mind on this question within 24 hours, though Mr. Kan also grumbled the government should be specific about the exchange rates it prefers during periods of emergency.

Few people share Mr. Kan’s view of himself as having a solid grasp of money matters. Commenting on his policies to combat deflation, the weekly Shukan Bunshun in its 10 December 2009 issue said he was “tone deaf in economics”. The Economist magazine called him “shallow”, while some Japanese economists described his statements as “rash”. Commenting by Twitter, former Defense Minister Koike Yuriko of the LDP wrote:

“I hope the new finance minister doesn’t misread the word macroeconomics as microeconomics.”

Said the head of one bank, who chose to remain anonymous:

“Mr. Kan understands nothing about the economy.”

The gathering darkness

It has become obvious by now that the new regime and its leaders will be every bit as bad—if not worse—than the one it replaced. The only real step to reform they’ve taken is to funnel all budgetary requests through the party instead of through legislators with ties to the civil service. It may be a bad idea to leave policy in the hands of a bureaucratic elite unaccountable to the electorate, but current conditions in the United States, to cite just one example, show that it’s just as bad an idea to put it in the hands of third-rate hacks inebriate of power and money who pretend to be progressives automatic for the people.

The basic convictions informing the worldview of the most influential members of the present government and its allies have been shown repeatedly everywhere they’ve been tried to have a tenuous connection to everyday reality. Those ideas have become such a part of their identity over the years, however, that even the most dismal of failures will not force them to face the facts and reconsider their positions.

The only common thread among the overall membership of the ruling party itself is that they are a common receptacle for anyone Not of the LDP. In practice, that makes them a congeries that includes leftists, middle-class seekers of the main chance, and people who think Tojo Hideki was misunderstood. This most motley of crews would never have gained control of the government without blind obedience to Ozawa Ichiro, whose political instincts more closely resemble those of a dictator in a single-party state than a political leader in one of the world’s leading democracies.

As one Japanese journalist wrote on his blog:

“The prime minister is just a decoration. In truth, the government is controlled by the party’s General Secretary (shokicho, the term the Japanese Socialist Party used for its leader). This was the political style of the Soviet Communist Party in the past. Is not Japan in the same circumstance today?”

Watanabe Kozo, another former Ozawa ally and friend, former senior advisor to the DPJ, and former deputy speaker of the lower house, had a different way of putting it. He said in Fukushima on the 8th that he thought Mr. Fujii had been “bullied by a ‘mother-in-law’. Speaking of the political weakness of Prime Minister Hatoyama, he said:

“There’s a frightening ‘mother-in-law’ behind him. He’s become something of a pitiful daughter-in-law who doesn’t quite know what’s going on.”

Mr. Hatoyama’s inability to demonstrate even a minimum of leadership skills either domestically or internationally, combined with the puerile and laughable excuses for his own funding scandals, make it a real possibility that his term in office will be shorter than that of Abe Shinzo, Fukuda Yasuo, or Aso Taro. The financial scandals are becoming even more serious for Ozawa Ichiro, but he has vowed to fight the prosecutors while maintaining an iron grip on the party. As a television commentator put it yesterday, any party that permits someone like Ozawa to retain power is “unhealthy”.

A sick party in charge of governance cannot manage the affairs of a healthy nation that is sound in mind and body. The Japanese voted in desperation for change, and wound up the prisoners of incompetents who will demand more of their money in taxes, tokens who’ll vote however Ozawa Ichiro tells them to vote, and preening political egos thrilled with finally having received the opportunity to prove that socialism works. The sickness extends to treating Big Business as “the enemy” and expecting them to pay financial and political fealty even after their favored candidates lost the election, rather than dealing with them as a powerful group lobbying for its own interests. There is little, if any, awareness that “the enemy” is the group most responsible for generating the national wealth they’re so anxious to redistribute.

Absent a breakup of the DPJ or a conviction of Mr. Ozawa, the party is unlikely to have the nerve—or the integrity—to call another lower house election before they’re legally required to do so in 2013. That could be changed by losses in the upper house election this summer, but the opposition LDP is still down for the count after their losses in last summer’s lower house election.

That means the new bosses will follow the old LDP practice of “passing around the washtub” of the premiership to those waiting in line for it, including Mr. Kan, Okada Katsuya, and perhaps even coalition partner Kamei Shizuka.

The danger is that a largely rudderless ship of state will become so encumbered with left-wing bilge that it will drift into a Sargasso Sea of irrelevance, hallucinatory introspection, and hypocritical paternalism, abandoned by the United States and vampired by the Chinese. Unless they find a way to administer electoral shock therapy, the Japanese might be shocked to find they have become the sick man of Northeast Asia.

It is sobering to contemplate what might happen over the course of this decade.

Afterwords: Japanese political parties receive financial assistance from the public treasury based on their number of elected representatives. Parties that dissolve are required to return those funds to the treasury.

As I explained above, the Liberal Party merged with the Democratic Party, and they disbanded to effect that merger. Mr. Fujii was the secretary-general of the party when it disbanded. The party was supposed to return more than $US one million in public funds, but that never happened. Mr. Fujii is widely thought to have been the man responsible for disbursing those funds to the soon-to-be-ex-Liberal Party members, though the money was never accounted for.

Posted in Business, finance and the economy, Government, Politics | Tagged: , , , , , | 1 Comment »

Will Japan’s economy go belly up?

Posted by ampontan on Sunday, November 29, 2009

“As the Japanese certainly realize, both restoring banks and corporations to solvency and implementing significant structural change are necessary for Japan’s long-run economic health. But in the short run, comprehensive economic reform will likely impose large costs on many, for example, in the form of unemployment or bankruptcy. As a natural result, politicians, economists, businesspeople, and the general public in Japan have sharply disagreed about competing proposals for reform. In the resulting political deadlock, strong policy actions are discouraged, and cooperation among policymakers is difficult to achieve. In short, Japan’s deflation problem is real and serious; but, in my view, political constraints, rather than a lack of policy instruments, explain why its deflation has persisted for as long as it has.”
– U.S. Federal Reserve Chairman Ben Bernanke

EITHER THE BUSINESS of following the movement of money for a living attracts those of a saturnine cast, or the business of following money itself makes people that way. Even in the balmiest of economic climes, they scan the skies for storm clouds while issuing dire warnings about the sooty wisps that just float overhead or dissipate before any rain falls.

In today’s economic climate, however, those who put the dismal in the dismal science are reveling in a saturnalia of pessimism so extreme it’s time for the rest of us to pay attention to the racket they’re making instead of shutting the window. It isn’t just the United States that’s causing the analysts to pour themselves another stiff drink; even the layman senses that the Americans are building another house of cards on the lot filled with the debris from last year’s collapse. What has some money watchers reaching for the bottle this time is Japan and China.

Earlier this month, Ambrose Evans-Pritchard wrote this column in Britain’s Telegraph headlined, “It is Japan we should be worrying about, not America.”

The barman sets them up:

Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world’s second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return.

And then pours:

Regime-change in Tokyo and the arrival of Yukio Hatoyama’s neophyte Democrats – raising $550bn (£333bn) to help fund their blitz on welfare and the “new social policy” – have concentrated the minds of investors at long last. “Markets are worried that Japan is going to hit a brick wall: the sums are gargantuan,” said Albert Edwards, a Japan-veteran at Société Générale.

Here’s the chaser:

Simon Johnson, former chief economist of the International Monetary Fund (IMF), told the US Congress last week that the debt path was out of control and raised “a real risk that Japan could end up in a major default”.

Care for a double? (My emphasis)

The debt situation is irrecoverable,” said Carl Weinberg from High Frequency Economics. “I don’t see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this.”

On second thought, make it a triple:

“This is incredibly dangerous,” said Russell Jones from the RBC Capital Markets. “The rate of deflation is shocking. The debt dynamics are horrible and there is the risk of a downward spiral.”

The author points some fingers:

Japan’s terrible errors are by now well known. It failed to jettison its mercantilist export model in time. It resisted the feminist revolution, leading to a baby strike by young women. It acquiesced in a mad investment bubble (like China now) in the 1980s, stealing growth from the future.

Some of that’s overstated. China and South Korea use the same mercantilist export model, and none of the three could have succeeded unless the U.S., among others, allowed it to succeed. Birth rates are falling throughout Europe and East Asia, so if there’s any “baby strike”, the picket lines aren’t just in Japan. (It also isn’t due to resistance to the feminist revolution, but we’ll be looking at that and the Chinese bubble in some upcoming posts.)

QE was too little, too late, and this is the lesson for the West. We must cut borrowing drastically over the next decade, and offset this with ultra-easy monetary policy.

By QE, he means quantitative easing, or the purchase of national and corporate debt instruments by the Bank of Japan. Finance Minister Fujii Hirohisa is upset with the BOJ for halting their QE, by the way. The central bank’s justification was concern over rising public debt, but Mr. Fujii wants them to resume. He says there’s a limit to what fiscal measures can accomplish. He did not mention structural reforms.

Added Deputy Finance Minister Noda Yoshihiko:

With the rate of price increases expected to be negative for a long period of time, we would like the Bank of Japan to indicate a clear stance on how it will deal with the situation.

Remember that it was fewer than two years ago the Democratic Party of Japan, then in the opposition, tried to create a political crisis by rejecting the Fukuda Administration’s BOJ appointments, claiming Finance Ministry OBs were unacceptable. Their rationale, which has merit and is employed as a general rule of thumb in other countries, is that they wanted to keep fiscal and monetary policy separate.

But opposition parties everywhere have a problem with remembering the things they used to scream about once they’re in charge.

(Incidentally, even when many in the DPJ signaled they were willing to accept some appointees with a Finance Ministry background, the idea was nixed by Big Boss Man Ozawa Ichiro. Mr. Ozawa has always been more interested in politics than in government, and in ruling rather than governing.)

The danger here is that central bank purchases of the debt securities of their own government create money, which is known as monetizing the debt. In addition to putting into circulation specially made pieces of paper with elaborate colored engravings that everyone pretends has value, the process allows politicians to overspend revenues without raising taxes or risking default. Since the Finance Ministry is agitating for tax increases, and there’s a real risk of default anyway, it would seem that Japan has painted itself into a corner. No wonder Mr. Fujii is concerned.

Credit rating downgrade

The following report came out about a week after the preceding article appeared:

Fitch Ratings warned Japan on Tuesday to keep to its borrowing target or risk a credit rating downgrade as the finance minister acknowledged the problem and tried to reassure rattled investors by saying spending had to be cut.

What’s the problem this time?

The government has said it plans to borrow 44 trillion yen ($490 billion) in the 2010/11 fiscal year starting next April, which would be on top of expected record issuance this fiscal year of more than 50 trillion yen. But Fitch Ratings said it’s hard to see how the 2010/11 goal will be achieved and borrowing much more than 44 trillion yen would spark a ratings review.

Thus:

“It’s not the sole determinant that will drive our assessment but other things being equal, then I think that would prompt us to review Japan’s current double AA-minus rating.”

Just when you think things can’t get any worse, they get worse.

The Government announced that Japan was again officially in a deflationary period. Here’s a passage from a website page explaining deflation, and how the lack of Japanese action in the past was deflationary:

Banks have delayed that decision (to collect on the loans), hoping asset prices would improve. These delays were allowed by national banking regulators. Some banks make even more loans to these companies that are used to service the debt they already have. This continuing process is known as maintaining an “unrealized loss”, and until the assets are completely revalued and/or sold off (and the loss realized), it will continue to be a deflationary force in the economy.

Here’s the suggestion the Deflation page authors passed along for dealing with deflation in Japan:

Improving bankruptcy law, land transfer law, and tax law have been suggested (by the Economist magazine) as methods to speed this process and thus end the deflation.

Those are probably some of the steps Mr. Bernanke had in mind. But what did the government do?

They passed through the lower house—after only eight hours of debate—Financial Services Minister Kamei Shizuka’s plan to encourage a debt moratorium and have the taxpayers guarantee the loans. In other words, instead of making the banks and businesses assume the risk—which is where it belongs—they’re making taxpayers liable for it.

Maintaining unrealized losses is deflationary. Therefore, the Japanese government is implementing a measure that will exacerbate deflation during a deflationary period.

Here’s another straw for the camel’s back: The government’s loan guarantee program has already used up half of its JPY 30 trillion (US$ 340 billion) budget, and the government says it doesn’t plan to allocate any more money. But how long will they keep singing that tune if too many default on those debts? Some default is inevitable, which means the government will be throwing the taxpayers’ money away. But what the heck, it’s only fiat money anyway. That’s the term for the money of the mind created after the debt has been monetized.

Still not worried?

As the old jest goes, if you can keep your head while those about you are losing theirs, perhaps you don’t understand the situation. Now we learn the Financial Services Agency plans to revise its rules for financial institutions to exclude debts suspended by the moratorium from the bad debt classification. In other words, the Government thinks that putting the peg in a different hole will hide the debt for the three-year moratorium period. Then, like Cinderella’s pumpkin, the name changes back and the banks have to write off the bad debts.

If the banks struggle to survive while writing off this debt, there will be inevitable calls for more taxpayer money to bail them out. Where will the government find the money to pay for all that?

Wasn’t “monetizing the debt” where we came in?

Yet another problem with Mr. Kamei’s economic demagoguery is the moral hazard. Some of the businesses freed from the responsibility of repaying their debt will either be unable to restructure their finances, or, considering human nature, may not do it at all. That would mean they go bankrupt anyway in three years, while all that fiat money backing the government’s guarantees evaporates with their business.

Still more to come

The banks are also getting the shaft from another direction. As this report notes:

“The Basel Committee on Banking Supervision is expected to raise the level at which financial institutions are required to maintain their core Tier 1 capital as early as 2012. Core Tier 1 capital includes the sum of common shares and internal reserves.”

The response of the Japanese banks:

“Mitsubishi UFJ Financial Group, Japan’s largest bank, is planning to issue a whopping 1 trillion yen ($11.2 billion) in new shares — the biggest-ever share sale by a Japanese financial institution. Investors are wondering if Sumitomo Mitsui Financial Group Inc. might be next.”

In still more other words: They’re going to dilute their stock, which has already taken a beating since Mr. Kamei announced his moratorium scheme.

It’s well past time for some people to take Mr. Bernanke’s observations seriously and make a choice: Risk losses in the next election, or risk losing the nation’s shirt.

Which one do you think the Ozawa-led DPJ chooses?

Posted in Business, finance and the economy, Government | Tagged: , , | 14 Comments »

Japan’s political kaleidoscope (4): Too many cooks, too many crooks, and too many kooks

Posted by ampontan on Monday, September 21, 2009

The devil’s greatest achievement was to have persuaded so many people that he doesn’t exist.
– Baudelaire

Never attribute to malice that which can be adequately explained by stupidity–but don’t rule out malice.
– attributed to Albert Einstein

The essence of the Democratic Party of Japan now is a three-tiered structure of the Finance Ministry, Party Secretary-General Ozawa’s troops, and public sector labor unions. It will be impossible to maintain this structure without tax increases.
– Nakagawa Hidenao

THE NEW JAPANESE COALITION GOVERNMENT led by the Democratic Party of Japan—with the People’s New Party and the Socialists Democratic Party of Japan invited to hop in the jalopy to buy their upper house votes and relieve the DPJ of the chore of conducting serious negotiations with more responsible legislators—faces a minefield of potential problems as they embark on their magnificent adventure.

Their most serious obstacle is a lack of internal unity. Many in Japan are calling this a “mosaic government” in reference to the incongruent philosophies of the DPJ’s constituent groups, and that doesn’t begin to account for the polar opposite philosophies of their coalition partners. The glue that held the DPJ together this long was the dream of taking control of the government. Now that they’ve reached their version of the promised land, they’re behaving like the crew that tore down the house but still has to figure out how the plumbing and electricity works. And rather than hit the ground running, they’ve hit the ground after running into each other.

The government was in power for just two days before squabbles broke out among Cabinet ministers, and the junior coalition partners began complaining that the DPJ is blowing them off.

Referring to their disagreements with the DPJ, SDPJ Secretary-General Shigeno Yasumasa told a group of reporters gathered in the Diet building, “We’re not on the same page.” PNP head and Cabinet member Kamei Shizuka complained directly to DPJ bigwig Kan Naoto on an NHK TV broadcast yesterday that the minor parties were being shut out of policy decisions.

Meanwhile, the Government must also overcome the skepticism of both the public and the news media that they are competent enough to be trusted with the nation’s car keys, and that they are committed enough to do what they’ve promised to do. That promise is to take the first steps on what the public thinks as their most important mission—wresting control of policy from the nation’s bureaucracy and strengthening local government.

That the public is skeptical is not in doubt. Skepticism might seem odd considering the party’s lopsided lower house majority and their receipt of about 56% of the popular vote nationwide. But an Asahi Shimbun survey published on 2 September shows otherwise. When asked whether they thought the DPJ victory was the result of voter support for their policies, here’s how the respondents answered:

No: 52%
Yes: 38%

Moving on to specific policies….

Wait! Enough! Screw that for a lark. I refuse to go along with the conspiracy of silence from those who primly cop a responsible commentator pose while ignoring that the launch of the new government has combined the slapstick of third-rate provincial vaudeville, leftover LDP hackery refried to hide the odor and slapped with a different label, and enough hypocrisy to choke a televangelist.

Yes, the Liberal Democratic Party had it coming, but it’s not what the Japanese people had coming. I wrote recently that based on past performance, a DPJ-led government had the potential to have more rings than the Ringling Bros., but no one could have predicted that Nagata-cho would turn into the world’s biggest Big Top.

Here’s the short version: Japan’s new government has too many cooks, too many crooks, and too many kooks—and some of them are the same people!

The Cooks…

The Chef de Cuisine

Sometimes called the executive chef, the chef de cuisine is the man whose name is on the menu. But he’s just as likely to spend his time visiting other restaurants or writing cookbooks.

Japan’s new executive chef is Prime Minister Hatoyama Yukio, who says he intends to reorient the government to make it Cabinet-directed, and who doesn’t say he is continuing a process begun by Koizumi Jun’ichiro and interrupted by his successors.

His position alone makes him a center of power both in the government and his party. One of the DPJ’s founding members and the head of his own faction/group, he used his substantial family fortune to keep the party afloat for several years. What could be more natural than assuming that he is the primary actor in the Government?

Well, there’s this: During the party’s six-day election campaign in the spring to select a new leader when Ozawa Ichiro resigned after his chief aide was arrested for accepting illegal contributions, one Japanese weekly reported that a secret document was circulated to the party’s MPs, who had the exclusive right to vote in the election. The document was said to have been a full frontal attack on Mr. Hatoyama’s opponent, Okada Katsuya, for his weakness during his previous tenure and his responsibility for the party’s rout in the 2005 lower house elections. The debacle, it asserted, was partly due to Mr. Okada’s lack of a spine. It claimed that the party would be much stronger with the “soft” Mr. Hatoyama as the front man and the “hard” Mr. Ozawa wielding a billy club behind the scenes.

So who’s the boss?

The Sous Chef

Nominally the second in command to the Chef de Cuisine, the sous chef often runs the kitchen and creates and cooks the food to be served, and you already know who I’m talking about before I type his name. So does the rest of Japan. Typical of recent reporting was this headline in the Shukan Post:

Ozawa Ichiro Controls the New Government—and Japan!

The new DPJ secretary-general (i.e., party head) will be the Shadow Shogun himself, Ozawa Ichiro, the man for whom an apt comparison would be the kuroko of joruri puppet theater. The kuroko manipulate the puppets in full view of the audience, but are dressed in black and masked to create the collective fiction of invisibility.

Mr. Ozawa is the kuroko who taught the DPJ how to win elections—mostly using all the Tammany techniques and political jiu-jitsu picked up from his mentor Tanaka Kakuei during his days in the LDP. He was also the kuroko of the short-lived Hosokawa and Hata administrations, the only other non-LDP governments since 1955 and another unwieldy amalgamation of incompatible elements.

After leaving center stage, Mr. Ozawa embarked a task more suited to his abilities–non-stop nationwide campaigning and canvassing in local election districts. As a result, an estimated 130-150 of the 308 DPJ members in the lower house and nearly one-third of the full membership now owe their seats to him. In practical terms, that means he has more command over their loyalty than does the party.

Everyone knows he is capable of picking up his ball and taking his team to start a new game elsewhere, as he threatened to do so nearly two years ago when the rest of the DPJ top brass blew their collective top over his proposed coalition with the LDP under Fukuda Yasuo. The Faustian bargain between Mr. Ozawa and the veterans who predate him in the party has allowed him to create a second center of power on which the nominal head, Hatoyama Yukio, must depend. During the DPJ election campaign, it was stressed that a vote for Hatoyama was a vote for party unity. Many saw in that slogan an implied threat that a vote for Okada as party leader meant that Mr. Ozawa would walk.

Money talks, and we all know what walks

The Shukan Bunshun reported that Prime Minister Hatoyama wanted to keep Mr. Ozawa in his position as acting president and Okada Katsuya as party secretary-general.

When word reached the puppet master, he exploded: “Hatoyama and the people around him are clueless.” Another acting party president, Koshi’ishi Azuma, said to have developed close ties with Mr. Ozawa, had to intervene on his behalf with Mr. Hatoyama.

Why the insistence on the position of party secretary-general? Because money talks. In that position, he has control of JPY 17.3 billion (about $U.S. 190 million) in 2010 in government subsidies for the party, a substantial rise from this year’s total of JPY 11.8 billion. He’s just following the literally golden rule of Tanaka Kakuei: Politics is numbers, numbers are power, and power is money.

The new prime minister has no illusions about whom he’s dealing with. Here’s Mr. Hatoyama quoted in the 25 February 1999 Yukan Fuji:

“Mr. Ozawa fled the LDP five years ago only because he lost in a power struggle in his faction and in the party. He’s raised the banner of governmental reform to prevent the people from realizing that.”

And we all know what they say about politics making for strange bedfellows.

Chief Kan Opener

Long-time DPJ stalwart and former party president Kan Naoto is in the Cabinet as both Deputy Prime Minister and the head of a new group called the National Strategy Bureau. What the national strategy will be, and what the bureau will do exactly, we don’t know—and neither does he—but he’s going to be in charge of it. It’s Standard Operating Procedure for the DPJ to come up with a policy or an idea and then figure out what to do with it only when it’s time to do the work.

Kamei Shizuka of the People’s New Party made a phone call to Mr. Kan to find out more about the bureau. Here’s how one newspaper reported it:

Kamei: What will you do at this National Strategy Bureau?
Kan: I don’t really know. There are several things I’d like to do, but for now, I can only grope my way forward.

The DPJ party platform says: “The National Strategy Bureau will create a national vision for the new era, and formulate the budget framework under political direction.” It’s supposed to consist of about 20 people. As is par for the DPJ course, there’s no mention of what its specific authority will be, whether “the national vision” will have anything to do with foreign policy, and how it will be involved with budget formulation. For all we know, it might turn out to be a political salon allowing the rookies and the rank and file to do some coffeehousing while the heavyweights take care of business somewhere else.

It is nearly axiomatic that everything the DPJ says is subject to change at any time, and sure enough, Mr. Hatoyama explained this week that the NSB will handle the framework of the budget while the Ministry of Finance will handle the details.

The foundation document for the party’s platform is their Index of Policies 2009, last modified in July. It’s on the party website, but only in Japanese. Here’s what it says about the budget:

民主党政権では、国民を代表する政治家が自ら予算を編成します…官邸に各省の大臣などを集め、予算編成の基本方針を決定し、省庁ごとに政治家が主導で予算を編成します。
Under a DPJ administration, politicians representing the people will formulate budgets. The Cabinet ministers will meet in the Prime Minister’s office, determine the basic policies for the budget, and then politicians will direct the budget formulation for each ministry.

But, you protest, key to civil service reform is to keep the MOF at arm’s length from that process. The MOF is notorious for being the bureaucracy’s worst offender at policy meddling. Takenaka Heizo, the man who directed fiscal policy and reform in the Koizumi Administration, fought a five-year running battle with the ministry and warned in December 2007 that the zombies had returned under Yasuda Fukuo. The DPJ promised to put an end to that for good by putting the civil servants in their place.

And just like Brutus, the DPJ are honorable men and women all.

Some think that Mr. Kan has ambitions of his own. If he decides that he would make a jolly good successor to Prime Minister Hatoyama, the National Strategy Bureau would make a jolly good launching pad. Meanwhile, moves are already underway in Okayama, Fukui, and Mie to establish local strategy bureaus in the party at the prefectural and municipal level. No one knows what their strategies will be either, but roughing out the framework for the central government’s budget won’t be one of them. Their efforts, which are partly designed to create stronger local party organizations, will likely be coordinated on some level with the Cabinet-level body.

And mark Mr. Kan down as being a bit miffed at Hatoyama Yukio. It’s reported that when he found out decisions for Cabinet posts had been made without his input, he quickly called the prime minister, incredulous that he wasn’t asked for advice.

Short-Order Cooks

Need flapjacks, a Philly cheese steak, or legislation made to order? Last weekend, the Nihon Keizai Shimbun reported that the DPJ had decided to create yet another new organization, tentatively called the Party Leaders’ Council, referring to DPJ senior executives. The council will consist of five members, including Messrs. Hatoyama and Ozawa, and will determine party strategy for the Diet. While decisions about Diet business have to be made somewhere in the Government, there was no explanation why that requires another new organization, and whether it will limit its purview to the Diet. One has to wonder at this point if the party leadership is dominated by the type of people who would rather draw up attractive menus than do any actual cooking behind a stove.

Chefs de Partie

These cooks, also called line chefs, are responsible for organizing and managing a small team of workers to ensure the restaurant’s work area is under control. Who better to keep the workers in line than the many DPJ members who started out in life by organizing workers, particularly those in the Japanese Teachers’ Union and the All-Japan Prefectural and Municipal Workers Union? They provide the foot soldiers and the muscle for the party’s election campaigns.

That’s no surprise for a party with more than a few ex-Socialists, both in the Diet and in executive positions at party HQ. In fact, says Tsujimoto Kiyomi of the Socialists Democratic Party of Japan, the DPJ is now more dependent on labor unions than was the Socialist Party itself. (The SDPJ added the second word in their name after the Berlin Wall fell for protective coloration.) Before the recent election, the number of DPJ Diet members with ties to the old Socialists was estimated to be just under 30, and they also brought many aides and staffers with them when they left the party in 1996.

The DPJ claims it’s committed to the devolution of governmental authority to local governments and reducing the number of civil servants. We’ll see how long that commitment lasts now that the public sector employees’ union helped put them in power.

How close is the party leadership to the unions? The first order of business for both Mr. Hatoyama and Mr. Ozawa the day after the general election was to visit union rallies in Tokyo to thank them for their help.

The Journeyman C(r)ook and the Apprentice Chef

The inherently unstable DPJ—more of a coalition itself than a party—organized a ruling coalition with two mini-parties from the opposite ends of the political spectrum, the PNP and the SPJ, supposedly because they need their votes to get bills passed in the upper house.

A Study in Body Language, or, Why a picture is worth a thousand words

A Study in Body Language, or, Why a picture is worth a thousand words

The three parties finally agreed on the terms for a coalition government last week. Here, the word “agree” means that the DPJ generally acceded to the demands of the two smaller parties after negotiations, though it’s a mystery why they wouldn’t have known what those demands would have been months ago and worked them out in advance.

What did the two microparties demand? The creation of yet another power center. The DPJ caved in to their insistence for forming—you guessed it—a new council consisting of the three party heads to function as a separate group within the Cabinet, even though both PNP head Kamei Shizuka and SDP head Fukushima Mizuho were awarded Cabinet posts.

Mr. Kamei’s accusation on NHK that the DPJ was cutting them out of the policy loop is a reference to the ruling party making policy decisions outside this council.

The Journeyman C(r)ook

The PNP is a splinter group of ex-LDP oldtimers who want to halt postal privatization, the most important governmental reform of the past 20 years. One of the reform’s objectives was to prevent the bureaucrats from diverting the funds in the postal savings and life insurance accounts to build all those bridges and roads to nowhere.

You know—putting the bureaucracy in its place.

The DPJ has always known exactly what the PNP wants to do, yet their platform clearly states that Japan Post will not return to being a state-operated enterprise. Their initial proposal in the coalition talks was to “consider” freezing the sale of government-held stock and reorganizing the enterprise. The PNP, however, demanded—and got—a firmer commitment to freeze the process without specifying what they intend the future form of it to be.

Party boss Kamei Shizuka has already served time in the Cabinet during his LDP career, most notably as Construction Minister in the days when there was enough pork on the hoof to start a new Commodities Exchange.

Mr. Kamei wanted to head the Defense Ministry, but settled for the Financial Services portfolio and Minister in Charge of Bloviating about Japan Post. The DPJ may already be regretting that decision, however. It turns out his party’s knowledge of economics seems stuck in the era when there was actually a need for postmen to hand deliver all the mail. Like most everyone else in the country, the DPJ probably didn’t read their website.

Here are some of their proposed solutions:

Solution 1: Shut down the Osaka Nikkei 225 Futures Market
Problem with Solution 1:
This Osaka market accounts for 59% of the country’s stock price index futures trading and nearly 100% of the options trading. Stock futures trading often performs its function of price discovery more rapidly than the stock market itself. Though the October 1987 stock market crash in U.S. was blamed on the fall of stock index futures, it was actually an early warning of the crash rather than the cause.

Solution 2: Eliminating mark-to-market accounting
Problem with Solution 2:
Bankers and their advocates hate this accounting method, while accountants, investor advocates, and banking analysts love it. It forces financial institutions to value their assets at true market prices, which could make them swallow huge losses during a market downturn. In other words, eliminating the practice enables them to hide those losses. The banking industry would rather value the assets based on future cash flow, and no, they have no idea what that will be either. Beth Brooke, global vice chair at Ernst & Young LLP, has said, “Suspending mark-to-market accounting, in essence, suspends reality.”

The idea was floated by some in the LDP in 2003, but Takenaka Heizo and the Koizumi Administration successfully resisted the suggestion. The man who proposed it was Aso Taro.

Solution 3: Eliminating capital adequacy requirements for banks
Problem with Solution 3:
These requirements determine how much money a bank can lend, but some think they can cause a credit crunch because banks will cut down on their loans to meet the requirements. The danger of elimination is obvious—a lending institution has to have something to back up its loans. But even Mr. Takenaka thought it was important for the requirements to be flexible.

This solution is being proposed as the discussion in the rest of the world is moving in the direction of raising capital adequacy requirements.

Solution 4: Issuing JPY 200 trillion in non-interest bearing government bonds (About $US 2.2 billion)
Problem with Solution 4:
Bonds of this type are sold at a discount to par value rather than with coupons, and the intention here is to fund the deficit. The problems involve the greater provision of central bank money, the potential for raising the fiscal premium, and damaging the credibility of the currency.

Solution 5: From Mr. Kamei himself—a three-year moratorium on debt repayments by small businesses, and the injection of public funds into banks that become financially strapped by the lack of income due to the moratorium.

Isn’t it fascinating that a man whose party’s website inveigles against the “strong eating the weak” is ready to have taxpayers bail out banks as one leg of his Rube Goldberg economics? Mr. Kamei says the SDPJ is for it too, and he wants to get it done by the end of the year.

I thought I told all you whippersnappers to sit down and shut up!

I thought I told all you whippersnappers to sit down and shut up!

The Mainichi Shimbun editorializes that these loans, combined with home mortgages, total JPY 300 trillion nationwide and account for 70% all bank loan portfolios. They worry the moratorium could cause bank failures among regional banks in particular. Mr. Kamei’s suggestion has already started a sell-off of bank stocks.

Finance Minister Fujii Hirohisa says nothing has been decided, and told reporters, “If the economy was really that bad, it would be one possibility to consider, but the Bank of Japan has not said that’s the situation we’re in.”

But Mr. Kamei insists it’s settled. He also said that he’d listen to Mr. Fujii’s opinions, but, “It won’t be discussed. It isn’t a matter that we’ll decide after discussion.”

The Finance Minister backed down.

Are Cabinet ministers in this administration to act as feudal lords, with the ministries as their personal fiefdoms? Where’s Prime Minister Hatoyama when you really need him? Where are all those newly created government policy bodies when you really need them? When it comes to that, where are all those Finance Ministry bureaucrats when you really need them?

Then again, Bloomberg quoted Prime Minister Hatoyama as saying that “he’ll avoid more bond sales, so new spending will depend on his success in shrinking the bureaucracy and public works programs”.

Richard Daughty, the COO of a financial advisory services company in the U.S., writes financial commentary under the name of The Mogambo Guru. He referred to Mr. Hatoyama’s claim as “Standard Political Crapola (SPC)”.

Though Mr. Kamei’s been in office less than a week, it was enough time for him to also cross swords with Haraguchi Kazuhiro, the new Internal Affairs and Communications minister. Mr. Haraguchi floated a plan for the reorganization of Japan Post into three independent companies rather than four companies under the aegis of a holding company. Said Mr. Kamei:

“I’m responsible for Japan Post, and I’ll take the responsibility and decide.”

The chastened Mr. Haraguchi explained, “It was just an illustrative example”.

The Apprentice Chef

Meanwhile, the other coalition partner, the SDPJ, has an agenda of its own. One of their goals is to eliminate the American military presence in Japan. Rather than support a greater Japanese defensive capability in its place, however, they also believe that people shouldn’t use weapons to defend themselves. (We’ll get to more of that later.) This is just what Mr. Hatoyama doesn’t need with the Americans wondering about his intentions after the translation of his goofy article from Voice magazine appeared in the New York Times, but hey, these are the people his party wants in government.

During the negotiations to create the coalition, the SDPJ declared:

“The proposal of amendments to the Japan-U.S. Status-of-Forces Agreement should be made from the perspective of minimizing the burden on the people of Okinawa, and the approach to the reorganization of American forces (in Japan) and their bases should be reconsidered.”

The DPJ balked, and the negotiations grew unpleasant. At one point DPJ representative and now Foreign Minister Okada Katsuya got so fed up with SDPJ head Fukushima Mizuho that he stormed out of the room. He charged that the DPJ wasn’t offering concrete proposals but delivering political lectures instead. Once a Socialist, always a Socialist.

Ms. Fukushima merely responded by going over his head and calling Hatoyama Yukio. And then going over his head by calling Ozawa Ichiro.

The DPJ finally compromised by changing the language to, “move in the direction of” reevaluating the agreements. They suggested the language be softened to create good relations with the Obama Administration in the U.S. Ms. Fukushima was delighted, and was shown crowing about it on TV to the other 11 members of her party with Diet seats.

Ms. Fukushima was angling for the Environmental Ministry portfolio, because, as she noted, they have a larger staff. Instead she settled for the new Consumer Affairs Ministry, which makes one suspect someone in the DPJ has a sense of humor. That’s just the sort of pretend-important Cabinet post the LDP once awarded to their female politicians as apprentice chefs to give them some experience in the political kitchen while using them as tokens to convince female voters they take them seriously. It’s surprising that Ms. Fukushima, who began her professional career as a radical feminist attorney, fell for it. But then a seat at the table of power is enough to trump principle for most leftists.

Who’s in charge here?

Before the recent election, the DPJ had 114 members in the lower house. They now have 308, for a net gain of 194 seats. The PNP had five; they now have three. The SDPJ stayed even at seven, but now have three directly elected MPs instead of only one. The reason for that increase was not due to greater popular support, but the DPJ’s choice to abstain from fielding a candidate in those districts.

The DPJ has far more than the 241 votes it needs for a lower house majority. Yet, in the upcoming administration, the handful of MPs from the formal coalition partners, and particularly their two party heads, will have a greater influence and say on the direction of the government than the 194 new DPJ members, who represent the popular will today.

That the DPJ created a coalition which includes the PNP and the SDP makes it difficult to avoid the accusation that their Government is a distortion of the democratic process and inimical to the expression of the popular will.

…The Crooks…

The reason I referred to Kamei Shizuka as a journeyman c(r)ook was recently explained in this Japanese-language blog post by Ikeda Nobuo. Mr. Kamei seems to have a knack for making money from shady deals with shady companies with a yakuza presence lurking in the background. One incident mentioned is described in a 1989 Yomiuri Shimbun article, which reports he made profits of JPY 400 million (about $US 4.18 million) in excess of market valuation in a 1987 stock sale that an official termed “an unnatural transaction.”

Perhaps that explains why he doesn’t like mark-to-market accounting.

It’s bad enough that a single-issue splinter party has an influence on policy far out of proportion with its numerical strength. It’s even worse that a man who might be mobbed-up is now in the Cabinet and punching far above his weight. But the DPJ put him there.

Suzuki Muneo

Meet former LDP lower house rep from Hokkaido Suzuki Muneo, the postwar record holder for jail time for a national legislator: 437 days, for bribery. Two of his top aides were also nailed. Mr. Suzuki had carved out a minor suzerainty in the Foreign Ministry. Though he had no official position, he had enormous influence over senior bureaucrats on policy and overseas aid projects.

After his release from prison, he became an advocate for decentralizing government, albeit under centralized control and direction, and an economic demagogue in the style of Kamei Shizuka. He was reelected to the Diet as head of a vanity party.

He was also sentenced to another two-year term for bribery in 2004 and has lost every subsequent appeal. The case is now before the Japanese Supreme Court. The next loss means another jail term and a five-year ban on public office.

But Mr. Suzuki is a pal of Ozawa Ichiro, and has influence among the voters in Hokkaido, where the carnage for the LDP was particularly gruesome this past election.

So the DPJ appointed the ex-con whose name is synonymous with lying and being on the take to chair the lower house Foreign Affairs Committee.

…And The Kooks

More troubling than the number of cooks and crooks in the governmental kitchen is that many of the people involved are not part of the reality-based community. The problem is best described by British novelist, journalist, and commentator James Delingpole, who recently published a book titled, Welcome To Obamaland: I’ve Seen Your Future And It Doesn’t Work. He says:

“In it, I warned the U.S. of the ‘smorgasbord of scuzzballs, incompetents, time servers, Communists, class warriors, eco-loons, single-issue rabble-rousers, malcontents and losers who always rise to the surface during a left-liberal administration….it becomes a problem – as you’re about to discover, if you haven’t already – when your ruling administration consists of nothing but these people. No longer do they qualify as light relief. They become your daily nightmare…. Making these predictions was a no-brainer because it’s exactly the same process as we’ve witnessed in Britain these last twelve years under New Labour.'”

He might just as well have been talking about Japan. We’ve already seen that the PNP is the Government’s version of a “single-issue rabble-rouser”, but there are even worse. Much worse.

Japan Teachers’ Union

No group is more committed to putting ideological blather and self-interest before the public good.
– Jonah Goldberg, on teachers’ unions

The goals of the Japan Teachers’ Union include improving the Japanese educational system so that it more closely resembles the systems in the United States and Great Britain. The California public school teachers appreciate those improvements so much that 25% of them now send their children to private schools.

They share the same disdain for individual achievement as their overseas cousins, as they want to do away with competitive examinations. Political indoctrination of the students starts early and focuses on the supposed sins of Japan rather than its achievements and opportunities. Former Chief Cabinet Secretary Machimura Nobutaka once said that the LDP would have been open to more detailed discussions of Japanese wartime responsibility in schools had there not been so many Marxists among the faculty.

The JTU recently cleaned up its website, most likely in anticipation of a successful election result. Once upon a time, it featured amateurishly drawn cartoons that revealed both their politics and the arrested development of their sense of humor. But tools are available to retrieve erased pages. Here’s an example of one of their eliminated cartoons featuring a likeness of what apparently is supposed to represent former Prime Minister Abe Shinzo.

JTU cartoon 1

For another taste of their junior hi humor combined with their “resistance”, try this article in Great Britain’s Guardian from three years ago describing the antics of school teachers who dislike Kimi ga Yo, Japan’s national anthem, and the imperial system:

Japanese who object to being forced to sing their country’s national anthem have a secret weapon: the English language. Kiss Me, an English parody of the Kimigayo, has spread through the internet and was sung by teachers and pupils at recent school entrance and graduation ceremonies, local media reported yesterday.

“Teachers and pupils”? See what I mean about indoctrination beginning early? The 11-year-old wise guys are indoctrinating the teachers in pre-adolescent spitballery.

Leftwing teachers unions regard Kimigayo, which is based on an ancient poem wishing the emperor a “thousand years of happy reign”, as a symbol of Japan’s militarist past.

When they say ancient, they mean more than a millennium. Though Kimi ga Yo was not officially adopted until about 10 years ago, it has been the de facto anthem for much longer.

Here are the complete lyrics:

May your reign
Continue for a thousand, eight thousand generations,
Until the pebbles
Grow into boulders
Lush with moss

Grab yer firin’ iron! Them’s fightin’ words!

Did some Japanese manipulate national symbols for their own ends during an ugly period of the nation’s history? Yes, as has every other nation in the world. But one reason children are sent to school is to learn the national narrative. The agenda of “leftwing teachers”, other than those in Soviet bloc-type countries, is to denigrate the national narrative by poisoning the minds of the students. The full Japanese national narrative is not defined by one gruesome chapter, nor is it an unending tale of imperialism! capitalism! racism! sexism! war-mongering! These people so dislike their country one is forced to wonder if the real object of their dislike is themselves.

Then again, perhaps they’re not used to tradition in matters such as these. Sergei Mikhalkov wound up writing three sets of lyrics to the Soviet/Russian anthem from 1943 to 2000. The first version was in praise of Stalin, the second version was Stalin Who?, and the third version is in praise of the Fatherland. Keeping the same tradition for more than 1,000 years? How conservative and L7 can you get!

The Japanese in this camp loudly proclaim that they are defenders of the Constitution, i.e., Article 9, the peace clause. Very few fall for it, however, because if they were true defenders of the Constitution, they wouldn’t hold in such contempt the first sentence of Article 1:

The Emperor shall be the symbol of the state and of the unity of the people…

Those who watched the Japanese election returns on TV saw JTU alumnus and Acting DPJ President Koshi’ishi Azuma preening on stage with the other party leaders after their big victory. He’s already said more than once this year that education without a political element is not possible (despite being against Japanese law). Everyone knows what political element he has in mind. Mr. Koshi’ishi’s pre-election position in the party was equivalent to that of Ozawa Ichiro and Kan Naoto, and he retains that influence. But even the DPJ wasn’t dumb enough to put him in the Cabinet and make him a sitting duck. He’ll just roll up his sleeves and go to work out of the public view.

DPJ

Here are some excerpts from the DPJ website in English:

We do not seek a panacea either in the free market or in the welfare state. Rather, we shall build a new road of the democratic center toward a society in which self-reliant individuals can mutually coexist and the government’s role is limited to building the necessary systems.

Does that not fairly scream of Third Way nonsense without writing the actual words? Saying that one is a believer in the Third Way is similar to some of those who call themselves bisexuals. The former is just a leftist who knows better than to parade on May Day carrying a red flag, while the latter have sesquicentennial encounters with the opposite sex to avoid coming all the way out of the closet and admit being gay.

And note the false equivalence between the free market and the welfare state. Pavarotti and Johnny Rotten were both singers, but that didn’t make them equals.

We shall restructure the centralized government from the perspective of devolution toward citizens, markets, and local governments.

They plan to do that by making direct government payments to parents for child rearing in lieu of tax deductions, by making direct government payments to families for high school tuition, and by making direct government payments to individual farmers.

The real DPJ political platform is the Index of Policies, on which the so-called Manifesto is based and then cleaned up for public consumption.

Unlike the Manifesto, the Index—which was last revised in July—is not in English. It’s also recently been tucked away on the party website under the Manifesto section, whereas before it was in full view. Some Japanese have said they find the language in the Index “peculiar”, and they have a point. I haven’t been through all of it—it’s long and packed with boilerplate and platitudes—but it does have some peculiar ideas for a party that claims to be devoted to citizens, markets, and local government.

Such as:

“We will proceed with consideration of an International Solidarity Tax that taxes specified economic activities across national borders, and which will be used as the funding source for international organizations to conquer poverty and support developing countries.”

What we have here is a policy with a retro-Bolshie name to levy an unjustifiable and ill-defined tax to fund an enterprise that anyone who goes through life awake knows will fail. Looks like all the highway signs on the DPJ Third Way read Merge Left.

According to the Index, they also want to maintain the inheritance tax to “Return part of (a person’s) wealth to society”. And here I thought that a person’s wealth was already a part of social wealth. Japan’s inheritance tax was 70% in 2005, which means that a lot of people spent a lot of time and trouble finding ways to get around it.

The party wants to establish a Permanent Peace Study Bureau in the Diet Library. One has to admit that does have potential as a job creation scheme. They’ll need a full janitorial staff to deal with all those cobwebs.

They also want to prevent suicide by spending a lot of money on analysis and studies for suicide prevention. They intend to make it an obligation of publishers to produce textbooks that children with weak eyesight can read. They want to levy stiffer taxes on stiffer drinks to promote health, which is sure to please those taxpayers who have one or two stiff drinks a month and are in excellent health, but will pay the same rate as the lushes.

Perhaps the most peculiar of word choices is found in the section that discusses the party’s stance against North Korea. Their approach comes across as somewhat hardline. But the section is titled, “The core development of diplomatic relations with North Korea”, or in Japanese, 北朝鮮外交の主体的展開.

This part – 主体的 – which corresponds to “core”, is seldom used in Japanese, and it has no bearing on the explanation that follows. But the word is used quite frequently in North Korea. There it’s pronounced juche, and it’s the ruling philosophy of the North Korean government.

The arrested development of their sense of humor is a more widespread malady than I thought.

The Socialists Democratic Party of Japan

In most Western countries, the socialists and the social democrats are the girly men of the left, unable to bring themselves to the truly whacked position of the remaining Communist poseurs. Perhaps that’s because they realize they would lose their opportunities for making money in the stock market and real estate investments under a true Red regime.

In Japan, those relative positions are reversed. The SDPJ are the vicious, vaporous, anti-life, and anti-reality bunch, while the JCP is better behaved and actually has some integrity.

Consider: The North Koreans attempted to assassinate then-South Korean President Chun Doo-hwan during a 1983 visit to Rangoon by detonating three bombs by remote control. The president was not killed, but 21 people were, including three South Korean Cabinet ministers and four Burmese.

The Chinese government criticized the North Korean government in the state media and broke off official contact with Pyeongyang for several months. Japan’s Communist Party also condemned it, saying that terrorism had no part in their movement. Japan’s Socialists?

North Korea was unconnected with the incident in any way because it was not beneficial to them.

For years they claimed that it was impossible for the North Korean government to have abducted Japanese citizens. When Kim Jong-il finally fessed up, their successors in the SDPJ excused the abductions by saying it didn’t compare in any way to Japanese behavior on the Korean Peninsula during the war.

The party’s website is not in English, but it does proudly proclaim that boss Fukushima Mizuho attended the Socialist International conference this year. It’s adorned with a few of the global-standard Socialist illustrations of a rose held aloft in a fist. Their environmental policies—cap’n’trade, anti-nuclear power, anti global “warming”—are the usual blast of hot air one expects from watermelons, so-called because they are green on the outside and red on the inside. Then again, the SPDJ has never bothered to hide its crimson exterior.

The DPJ voluntarily chose the SDPJ as their coalition partners and gave the party head a seat in the Cabinet. They helped boost the party’s chances in the recent election by refraining from running a candidate in districts with prominent SDPJ members. That’s how they picked up two directly elected seats in the lower house.

Fukushima Mizuho

The SDPJ boss hasn’t always been so chummy with the DPJ. She once said, “The LDP and the DPJ are only as different as curry rice and rice curry.” Now that she’s part of the government headed by the latter, it would seem that she has developed a more discriminating palate.

She and husband Kaido Yuichi are both attorneys. Ms. Fukushima has focused on radical feminist causes, and she’s written three books on sexual harassment and domestic violence. She’s also written another called Konna Otoko to ha Zettai Kekkon Suru na! (Under No Circumstances Marry a Man of This Type!). She and her husband have frequently associated with people linked to the Chukaku-ha, or Japan Revolutionary Communist League, and defended them in court trials.

They must have had plenty of work. From the late 60s to the early 90s, Chukaku-ha led or was involved in numerous open battles with police, sabotaged the railroad in 33 Tokyo and Osaka locations when it being privatized, attacked LDP headquarters with a flamethrower mounted on a truck, conducted fatal arson and bombing attacks, and fought bloody battles with two other groups on the ultra-left, resulting in an estimated 100 fatalities. Their slogan is “Workers of the world unite under the banner of anti-imperialism and anti-Stalinism!” That presumably means they were down with K. Marx, Lenin, Trotsky, and Mao.

In May 1991, Chukaku-ha changed course and decided to focus its efforts within trade unions and mainstream left-wing movements. One of those efforts was a petition drive to prevent Japan’s use of military force in the event of a foreign invasion. Ms. Fukushima signed it.

Registered as an attorney in 1987, Ms. Fukushima first won election to the Diet in 1998, though it is only a proportional representation seat in the upper house. She is one of the few party leaders in Japanese postwar history who have been unable to win a Diet seat in a direct election, or unwilling to try.

Let’s have Madame Chairman speak for herself. Here’s a brief transcript from her 2005 appearance on the TV show Asa Made (Until Morning), being interviewed by Tahara Soichiro.

Fukushima: I am absolutely opposed to the use of sidearms by police officers. For one thing, even perpetrators of crimes have their rights. The police must not be allowed to injure criminals at all. Even if it is a brutal criminal with a lethal weapon, the police should approach the arrest unarmed.
Tahara: And what happens if a police officer does that and is killed?
Fukushima: Well, that’s the job of police officers…(Shocked sound from the people in the studio. Showing irritation at the response, she continues)…Besides, if a criminal puts up that much resistance, there’s no need to go to all that trouble to arrest him. There’s no problem with letting him escape.
Tahara: But what if the criminal who runs away kills someone else at a different location?
Fukushima: That’s a separate problem…

Here’s an excerpt from a recent Diet debate about the possible interception of an incoming North Korean missile.

Fukushima: If the intercepting missile hits the target, debris will fall. If it misses, it will fly outside the country. Can you say there won’t be any harm caused to the citizens either in Japan or in other countries?
(Then) Foreign Minister Nakasone Hirofumi: If it presents a danger of damage to the lives and property of our people, that missile should be intercepted as a matter of course.
(Then) Defense Minister Hamada Yasukazu: But there would be more damage if the missile would be allowed to fall. If it’s intercepted in space, most of the debris would burn up and not fall to earth. It’s important to destroy the missile first and minimize (its potential for harm).
Fukushima: If we miss, it will harm the national interest, and if we hit it, what happens if it turns out to have been just a satellite?

There was laughter at this remark from opposition benches for some reason, but then we’ve already found out about the sense of humor of the Japanese left.

The DPJ thought she would make a dandy Minister of State for Consumer Affairs and Food Safety, Social Affairs, and Gender Equality in the new coalition government, and so appointed her to that position.

Tsujimoto Kiyomi

Currently the SDPJ’s head of Diet strategy, Tsujimoto Kiyomi came up with the idea for taking cruises on a Peace Boat to the countries that Japan invaded during the war when she was a Waseda undergraduate in 1983. It’s not easy for a spunky coed to organize a project on that scale, regardless of her commitment or idealism, so she needed some help.

She received that help from Kitakawa Akira, who later became what is described as her common-law husband, and Oda Makoto.

After the collapse of the Soviet Union and intelligence service archives became available, it was discovered that Mr. Oda had been a KGB agent. Mr. Kitakawa was a member of the Japanese Red Army, a revolutionary terrorist group formed in 1971 that was responsible for bombings, airplane hijackings, and armed attacks throughout the world. One member was caught with explosives on the New Jersey Turnpike in the 1980s and spent time in an American jail. Several members were granted asylum in North Korea, and the Japanese government is trying to extradite them. It remains an obstacle to the normalization of relations.

Though vicious, the group’s membership was always small, and they immediately had problems finding the money to survive. It was provided by Palestinians starting in 1972.

Join me in solidarity to smash the country and make the world safe for large purple vibrators

Join me in solidarity to smash the country and make the world safe for large purple vibrators

The Peace Boat, meanwhile, expanded the range of its voyages and visited the Middle East. Cruise members met several times with Yasser Arafat, perhaps to thank him for his money and ask for more. It was eventually awarded Special Consultative Status with the Economic and Social Council of the United Nations. That is an honor they share with Pat Robertson’s American Center for Law and Justice (he speaks in tongues on television), the Brazilian Federation of LGBT Groups (Associação Brasileira de Gays, Lésbicas e Transgêneros, ABGLT), the Advisory Commission of the Evangelical Church in Germany, The American Civil Liberties Union, The Association for the Advancement of Psychological Understanding of Human Nature, The Centre for Women the Earth the Divine, The Italian Confederation of Labour, Conscience and Peace Tax International, Fraternite Notre Dame, Inc., and the International Academy of Architecture. That would suggest the designation is as easy to obtain as a package of free tissues outside any large train station in Japan.

Mr. Kitakawa was responsible for JRA activities in Europe, and he was eventually deported from Sweden. Back in Japan, he founded the Daisansha publishing company, which has released six of Ms. Tsujimoto’s books.

She was recruited by former Socialist Party leader Doi Takako to run for the Diet, and she won her first election in 1996. A few years later, Shigenobu Fusako, the founder of the Japanese Red Army was arrested in Takatsuki, Osaka, Ms. Tsujimoto’s home district. She was in the company of Yoshida Mamoru, a member of Tsujimoto’s staff in Takatsuki.

As an MP, she started receiving national exposure in the early years of the Koizumi Administration with her semi-hysterical challenges of the prime minister during question time. She does have spunk, however, and it was great television, so a star was quickly born.

It just as quickly faded after her success went to her head and she accused the aforementioned Suzuki Muneo during his questioning in the Diet of being a “trading house for suspicion”. Mr. Suzuki, semi-hysterical himself, blew up in a memorable rant.

Those of you who enjoy interesting coincidences will be delighted to know that not long afterwards, investigators just happened to discover that she had been raking off funds from the money that was supposed to be paid to her political aides. It was suspected that she gave some of the money to Mr. Kitakawa. She was sentenced to two years in jail with a five-year stay of execution.

Ms. Tsujimoto resigned her Diet seat, but Japanese voters can be a forgiving lot, and she’s back, though keeping a much lower profile.

Again, let’s let the lady speak for herself. Here’s one:

“It’s not possible that the peace-loving North Koreans would abduct anyone.”

Golly, where have we heard that before?

She has a strange conception of loyalty for a Diet member:

“I don’t want to be a Japanese. I want to be an international person.”

Perhaps I should have spelled that “internationale”.

Indeed, she has been so internationale in general, and pro-North Korean in particular, that some Japanese have wondered if she is a naturalized Korean with family roots in the northern part of the peninsula.

Here’s how she views her duties as a national legislator. She was speaking informally to a person she didn’t realize was a reporter:

“They say a Diet member should protect the lives and property of the citizens, but that is not my intention. My role is as a ‘national destroyer’ MP who will try somehow to destroy the framework of the state.”

There’s a bit lost in the translation, as Ms. Tsujimoto is making a pun. The word for Diet member is 国会議員 (kokkai gi-in). She replaced the first two characters with the homonym 国壊 (kokkai), which means “national destruction”.

She also has a unique sense of fun. During a feminist conference sponsored by the owner of a shop for sex toys, the amusingly named Love Piece Club, she autographed a large purple vibrator for an auction.

Now nobody objects to the ways people choose to get their kicks, but one would expect a Diet member to show some discretion at a public event.

Sidebar

The Love Piece Club has a website. One of the pages is here, which displays the nude snapshots a photographer took of the “Buy Vibe Girls” at the Yasukuni Shinto shrine bright and early one morning. Ordinarily, it’s standard Internet practice to warn of photos that aren’t work safe, but any work supervisor who caught you looking at these is more likely to feel sorry for you than angry at you.

The title of the page, by the way, is Nobody Knows I’m Lesbian. Come on, Mina, who are you trying to kid? All anyone has to do is look at your picture.

Now, former combatants and ex-cons Tsujimoto Kiyomi and Suzuki Muneo are part of the ruling coalition, proving beyond doubt that politics makes for the strangest of bedfellows.

One wonders which one brought the large purple vibrator.

Ms. Tsujimoto, a politician convicted of skimming public funds, who pals around with terrorists, who would rather be known as the national destroyer than a Japanese, and who has vowed to wreck the framework of the state, was appointed by the ruling DPJ to serve as Vice-Minister for the Ministry of Land, Infrastructure, and Transport. That ministry is responsible for the national infrastructure and dealing with disasters.

Here’s the best part: No one in her party likes the idea at all. Ms. Tsujimoto’s own initial reaction was:

やだ、やだ、やだ、やだ!

That’s what a four-year old throwing a tantrum might say when told to take some unpleasant medicine—No, no, no, no!

She gave in after being told that party head Fukushima Mizuho signed off on it. But then Ms. Fukushima claimed she didn’t sign off on it. But then she admitted that she did.

With Ms. Fukushima occupied by her make-work duties in the Cabinet, Ms. Tsujimoto was being counted on by the party to be the face of their campaign in next year’s upper house election. Those with a Machiavellian turn of mind might wonder if the DPJ purposely wanted to give her some make-work duties of her own in the bureaucracy. That would prevent her from being the poster girl of the SDPJ campaign, making it easier for the DPJ to take them out in the election and form a government without their help.

It’s a wrap!

I have nothing but the deepest sympathy for those Japanese who were so fed up with LDP rule that they felt compelled to vote for the DPJ and its coalition of too many cooks, too many crooks, and too many kooks in the hope they would receive clean government, real reform, and responsible political behavior.

If we’re lucky, perhaps they’ll manage to achieve some of their promised reforms during their administration, particularly shutting off the entry of bureaucrats into public sector jobs. They might yet reinsert the jackhammer into the foundation of the structure of interests that holds the country back. Maybe their conduct will spur the rejuvenation of a sharp opposition party, regardless of label, whose members will be decisive enough to ditch the mudboaters before refloating their political ship.

Credit where credit is due

Foreign Minister Okada Katsuya

Mr. Okada has opened attendance at his press conferences to all members of the Japanese news media, ending the kisha club monopoly in which only certain outlets get direct access to the politicians. Now the weekly magazines, Internet publications, and sports newspapers (some of their political reporting is better than you think) can attend. This development was not reported by the Asahi Shimbun, the Yomiuri Shimbun, or the Nikkei Shimbun, which constitute Japan’s press monopoly. Perhaps they’ve taken lessons from the New York Times, the Washington Post, and most of the American TV networks.

I’ve said before that the DPJ always carries banana peels in its back pocket for pratfall practice, and this time Prime Minister Hatoyama showed off his best Buster Keaton form. Before the election, he promised that he would open up his press conferences too. The reporters asked if he would put that in the party platform. He said no, it wasn’t necessary to go that far.

The only reporters allowed at Mr. Hatoyama’s first press conference were those in the kisha club.

Maehara Seiji

The new Minister of Land, Infrastructure, and Transport, Mr. Maehara is often criticized by the party’s left wing and DPJ hacks because he (a) is not left-wing, (b) believes in a strong national defense, (c) intensely dislikes Ozawa Ichiro and his presence in the party, and (d) is capable of apostasy by working with the Koizumian reformers of the LDP, including rebel Watanabe Yoshimi. If there’s anything the left hates more than common sense, it’s a traitor.

One of his first announcements as MLIT chief was the suspension of the Yamba Dam project in Gunma. This was immediately hailed by all those anxious to end the ties between construction industry pork and the government once and for all.

But they couldn’t even get this one right. The governments of the six prefectures that will be affected by the decision were not at all pleased. Tokyo in particular is concerned about the water supply for the exploding population in some areas of its jurisdiction. Mr. Maehara is going to visit Gunma later this week and talk to local officials. Some are so upset they say they won’t attend if the decision is not changed.

Also opposed to the decision is the Gunma governor–who is affiliated with the DPJ. The governor was miffed that the prefectural government wasn’t consulted before the MLIT announced the decision.

In other words, the party that promised to decentralize government and devolve authority to local governments made an arbitrary central government decision without any input from local government and a governor on their own team.

Finance Minister Fujii Hirohisa said no final decision had been made, but the MLIT is behaving as if they’re going to shut it down. Mr. Fujii deferred to Mr. Maehara.

Except Mr. Maehara spun around again and deferred to the locals. He’s now said the legal procedures to halt the project won’t begin until the “understanding” of the six prefectures is obtained.

Now you know why some charge the DPJ wasn’t ready to assume control of the government. All of this, including discussions with the local governments, should have been worked out long ago. Mr. Maehara says he is merely executing one of the planks in the DPJ platform. That was the same platform the party kept revising after its initial release just last month.

Kawabata Tatsuo

Mr. Kawabata was named Education Minister, much to the relief of those who were apprehensive about Koshi’ishi Azuma winding up with that job. The JTU wants to roll back the education reforms of the Abe administration, particularly the new teacher certification requirements. But at his initial press conference, Mr. Kawabata said that would be only one of several options examined over the next four years. Those experienced at reading bureaucratic tea leaves think that means the JTU might not be getting carte blanche in the new Government after all, though they warn that Mr. Koshi’ishi has yet to be heard from.

Unfortunately, Mr. Kawabata talked up a proposal for extending teacher training to six years—the same amount of classroom time as a Japanese medical doctor. But then classroom instruction is hardly brain surgery. Every extra minute seated in a classroom staring out the window while some teacher drones on about classroom teaching is a minute wasted. If the objective is to improve classroom instruction, that time would be better spent being actively involved with life as it’s actually lived.

Afterwords:

Sorry for not keeping my promise. The last post said the next one would be “tomorrow”, but that turned into two weeks. I had some work to do, and wading through the sheer deluge of information related to today’s topic took some time.

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