What Next for Japan?
Richard Katz and Peter Ennis are co-editors of The Oriental Economist Report, a monthly newsletter on Japan, and the semiweekly TOE Alert. Katz is also the author of Japanese Phoenix: The Long Road to Economic Revival.See more by Richard KatzSee more by Peter Ennis
This past weekend, just two years after his predecessor led the Liberal Democratic Party to its greatest electoral triumph, Japanese Prime Minister Shinzo Abe led it to its worst electoral trouncing since the LDP's founding in 1955. Apparently convinced that little has changed, Abe is trying to hang on. Since the election was for the Diet's upper house but it is the lower house that names the prime minister, Abe has no legal obligation to resign. Nonetheless, he faces growing pressure to take responsibility for the defeat. Polls show that 56 percent of the Japanese public thinks he should step down. Some former LDP cabinet ministers and a former prime minister have publicly agreed. And many politicians in Abe's party who face elections before the end of 2009 fear defeat if he remains their standard-bearer. So even though Abe himself seems to be in denial, it is doubtful that he will be able to hold out for long.
It took Abe only ten months to move from a 70 percent approval rating to 27 percent on the eve of the election. He started off with a triumphal move toward reconciliation with China and South Korea but stumbled within weeks by inviting back into the LDP Diet members whom his predecessor, Junichiro Koizumi, had expelled in 2005 for opposing reforms. Abe's move seemed like a betrayal of Koizumi's legacy and the voters' own approval of it, and his ratings started tumbling.
Then Abe staked his tenure on a gigantic miscalculation: that the economy was in such good shape that he could ignore economic issues. But while Japan's GDP and corporate profits have grown and its unemployment rate has declined, the country's ordinary citizens still suffer from falling real wages, high levels of youth unemployment, increasingly expensive education, rising taxes, falling social security benefits, and near-zero returns on the savings accounts that the elderly use to buy daily necessities. Forty-two percent of the respondents in a recent newspaper poll said they were worse off than before Abe became prime minister; 54 percent said they were no better off.
Abe remained out of touch throughout this process, devoting himself to projects such as revising the constitution to help Japan's military to play a bigger role and making the education system more patriotic. Voters did not disagree with his stances on such issues, but nor did they see them as the highest priority.