Thursday, February 23, 2012

How Will Prime Minister Noda Slice his Neapolitan?

In the second week of February, the Noda Cabinet has seen its popularity reach new lows.  The Kyodo poll of February 17 and the JNN poll of February 20 have found that support for the cabinet has fallen below 30%, a disturbingly low level for a cabinet that is only five months old. 

When those who do not support the cabinet are asked the reason for their negative views of the government, respondents cite either the pointlessness of policies being pursued, the low expectations of the cabinet’s getting anything done, and the prime minister’s lack of leadership.

This extreme pessimism felt by a majority of the public is out of sync with the actual state of affairs in the Diet.  Rather than being deadlocked or sidetracked in political circuses, the three main political parties are actually hammering out agreements on major pieces of legislation at a fairly astonishing rate.  The signing on February 17th of an agreement between the three major parties to cut the salaries of bureaucrats by an average of 7.8% is just the latest example of this cooperative trend.

The key takeaway from the signing is that the bill in question was not drafted by the DPJ or its ruling coalition partner the PNP.  Instead the draft came from the New Komeito. 

The Noda Cabinet’s willingness to hand over part of the bill drafting process to the opposition demonstrates the rather advantageous position Prime Minister Noda finds himself in terms of policymaking.  It is as if he has been handed a scoop of Neapolitan ice cream (it has three flavors): he has the pick of different policy options.

The first Neapolitan flavor is the obvious one of having three main parties in the Diet.  When a policy listed in the DPJ’s party manifesto of 2009—still the main source of DPJ initial postures—is seen as having no chance of passing, Noda and the DPJ leadership have shown no shame or reticence in borrowing ideas from their rivals.

In the debate over the reform of the House of Representatives, the main DPJ bill borrows the idea of abolishing five electoral districts from LDP and the reworking the manner proportional seats are handed out from the New Komeito. As for the much anticipated and much feared (in some quarters) amendments to the post office privatization bill, the DPJ seems to be ceding the role of lead actor to the New Komeito.

The division of control of the Diet among three parties is not the only scoop of Neapolitan ice cream Noda can enjoy.  There is a second to choose from based upon the DPJ’s recent past, its origins and the situation outside Japan.

The first flavor in the scoop is the Ozawa Ichiro-drafted 2009 Manifesto.  This list of campaign promises earned scorn at the time of its release as representing nothing more than a shameless giveaway of goodies to every constituency in order to effectively buy the election.  However, the fiscal expansion carried out under the manifesto’s mandates provided a tonic for the country in the aftermath of the Great Recession, with few negative effects in the Japan government bond market.  Noda can still pick up ideas from out of the manifesto, even though it was drafted by a political rival with very different political proclivities.  Drawing ideas from out of the manifesto also pleases the 150 or so legislators who feel a strong obligation to paying respect to Ozawa, as he was the one who anointed them as candidates.

The second flavor of policy is the traditional DPJ policy mix.  It shares with the Ozawa mix a visceral mistrust of the bureaucracy.  It differs radically in its budgetary priorities, however.  It has always seen the limitation, or if possible the reduction, of the budget deficit as key to Japan’s economic health. This has been the party’s mainstream ideology since its establishment.  The focus on cutting government waste and fiscal discipline endeared the party to the urban and suburban white collar middle class, which saw LDP fiscal profligacy as the surplus being created by their profitable enterprises being squandered on keeping rural areas and marginal businesses on life support.

This traditional DPJ stance of fiscal restraint and retrenchment, which is shared by the bureaucrats of the Finance Ministry, guides the spirit of current government action.  That the recent loosening of political controls over the bureaucracy has led to the compilation of a draft budget demonstrating a return to the bad old days when each ministry’s interests, not the national interest, guided budget requests, shows that a spirit to minimize is not yet enough to thwart incentives to maximize.

In line with the traditional and entirely domestic-oriented DPJ tendency toward conservative budgets is the turmoil in international sovereign debt markets.   This is the third flavor in Noda’s Neapolitan policy choice mix.  Japan is not Greece, Italy, Spain or Ireland.  However, the fear of even a mild panic in the Japanese bond market, with a consequent fall in bond prices and an explosion of the government’s interest payment obligations, provides the Noda Cabinet with a stick to beat back suggestions that the government should be expanding Japan’s debt burden further in order to countermand the deflationary effects of the proposed raising of the consumption tax to 10%.  Prime Minister Noda and Finance Minister Jun Azumi have constantly brought up the situation in Europe as justifications for the Japanese government’s need to put its fiscal house in order. 

The Noda Cabinet’s being able to pick and chose choose from amongst the various flavors of policy gives it an unprecedented degree of flexibility.  It also gives the Noda Cabinet a certain degree of leverage in getting legislation passed through the Diet, as each of the policy flavors is legitimate in its own way—either from its being a particularly party’s fixed policy position or a demonstration of an awareness of Japan’s place in the world.

The political opinion polls demonstrate a lack of public faith in the Noda Cabinet's ability to lead the country in a positive direction.  It may take a very long time for the Japanese people to appreciate the government’s rather favorable political situation. There is a corrosive atmosphere of deep pessimism abetted by a news media complex that sees destruction of Japanese administrations as both a duty and a game.      

Michael T. Cucek
Research Associate, MIT
Author, Shisaku Blog, http://shisaku.blogspot.com
Appeared in the February 21, 2012 is of the Asia Policy Calendar sent to APP members.

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