The August 2009 election remade the political landscape in Japan giving the Democratic Party of Japan (DPJ) firm control over the government as well as ousting the conservatives who had held power for more than fifty years prior. The DJP seized control of more than 300 of the 480 seats in the lower house of parliament and, in turn, assumed control of the selection of the next prime minister.1
Backlash against the conservative Liberal Democratic Party (LDP) had been festering in Japan for several decades. Poverty, social inequality, and insecurity were among those grievances cited for turning out the conservative party and inciting the public to opt for a new government coalition.2
Among the most prominent reasons for putting an end to the de-facto one-party state in Japan is arguably the current global financial crisis that began in 2008. The current global financial crisis has undoubtedly found its way into every corner of the globe by virtue of the profound globalization movement that has revolutionized international connectedness.
As a result, the Japanese economy has not been immune to the global financial struggles and, in fact, has been very vulnerable to the worldwide recession. February 2009 witnessed a deepening of Japan’s financial crisis after figures showed that exports fell by a record 46 percent as compared to the previous year.3
Japan’s laggard economy has suffered severely which had certainly contributed to a growing sense of discontent with the ruling LDP. As a result, the Japanese have elected an entirely new political system, representing much more than merely a new political party.4 Characterized as a pro-American, pro-business party engaged in large incidences of corruption, the LDP was overturned.
The rejection of the LDP is part of a backlash, in part, against everything associated with the business-obsessed bureaucratic networks of power seen as responsible for the financial crisis.5 The DPJ has been entrusted with the task of revitalizing the Japanese government and, perhaps most importantly, the economy under the leadership of the newly appointed Prime Minister Yukio Hatoyama.
In an attempt to understand what a new political landscape in Japan means for Japan’s politics, economy, and its international connections, it is important to look into the pre-election tenor of Japan as well as what the victory of the DPJ translates to in terms of US-Japanese ties.
A Helpful Brief on the Elections: “Japan Elections: Change of Government Likely”
Globalization, Financial Vulnerability, and “The Lost Decade”
Japan is no stranger to economic struggles. The 1990s brought tremendous angst and difficulties to Japan, a period often referred to as the “lost decade.”6 The Japanese had severe structural problems that eventually led to a banking crisis and subsequent national economic fissure. Some scholars note that the “Lost Decade” was a complex recession primarily based in insufficient demand due to the crashing stock and land prices.7
Structurally, neither the Bank of Japan (BOJ) nor the Ministry of Finance took the appropriate effective measures to counter the recession.8 The government failed to comprehend the extent of the recession and, in turn, responded unproductively.9 The lack of drastic policies was attributable in part to the government’s decision to provide generous safety nets for failing banks to offer deposit protection for over 10 years.
As a result, weak banks survived far longer than they should have thus prolonging the suffering of the banking sector.10 Additionally, scholars Derek Scissors and J.D. Foster of the Heritage Foundation state the problems stems from “Japan’s failure to move its economy away from structural reliance on exports and trade surpluses.”11
Every sector of the economy was weakened and accumulated alarming debt levels demonstrating little to no profitability.12 To combat low productivity and a sluggish growth rate, the Japanese invested in large construction projects amounting to a staggering $6.3 trillion in public investment between 1991 and September 2008.13 The “lost decade” came to an eventual close after extensive clean up of the debt-ridden banking system and increased exports to the United States and China.14 As such, discontent with the LDP can be traced back to this period as some Japanese blamed the party for turning the country into a public-works welfare state with a glut of government spending.
The current financial crisis, with roots in the United States banking and real estate bubble, has plagued Japan at the core of its economy. Reports from late August 2009 claim Japanese unemployment has reached a record high of 5.7 percent, its highest level since the Second World War.15 Japan has been one of the hardest hit countries during the financial crisis among the major world economies notably because of the country’s tremendous reliance on exports. It is logical that a global contraction of state economies severely limits Japan’s opportunities for exports.
Reports of an end to Japan’s recession came late in August 2009 after four consecutive quarters of contraction.16 Reasons for the improvement vary from a massive government stimulus package to recovering demand for Japanese exports in countries such as China.17 However, the improvement was not enough to keep the LDP in power and abate the growing discontent of the Japanese citizens. Some argue that the Japanese have undergone an “identity crisis” in the wake of the global financial crisis since coping with a seriously battered economy. Other issues of duress for Japan have been income inequality, child poverty, and impoverished retirees.18
The anti-LDP movement that took hold of the country manifested itself in a landslide victory for the Democratic Party of Japan winning 308 seats in the legislature giving the party an undeniable majority and control over the national agenda. Political scientists have been salivating over the long-term question of how Japan will adjust to a new system of alternating political power among parties and ultimately create apt institutions capable of buttressing this type of political revolution.
An Election Heard Around the World
The historic elections in Japan last month changed not only Japan’s political and economic structures, but also the country’s relations with several major powers, notably the United States. The question of what LPJ’s foreign policy will be is at the forefront of the minds of many in Washington and scholars alike. Hatoyama and his party are confronted with the challenge of defining a new policy toward the United States and the scope of US-Japanese relations since the LDP was perennially and outwardly recognized as pro-American. For 54 years the United States has dealt exclusively with the Liberal Democratic Party building a strong relationship based on economics and security dependence. What the future holds for Hatoyama and the DPJ is yet to be seen.
Nonetheless, Hatoyama has already made a statement that relations with the United States remain a pivotal point in Japanese foreign policy.19 Hatoyama told reporters, “I told him [President Obama] that we think the US-Japan alliance is the foundation of Japanese diplomacy and that I would like to build US-Japan relations with eyes on the future.”20
Doug Bandow, senior fellow at the conservative Cato Institute, argues that the relationship between Tokyo and Washington must change and the United States must take the first step by relinquishing defense responsibilities to Japan and break the cycle of Japanese dependence on the US for military support.21 Bandow asserts that it is no small feat that Japan has the second largest economy in the world and it should show off its economic prowess with assuming greater political and military responsibilities.
An Interview with the Director of the Center for Japan-US Business and Economic Studies on the future of Japan-US business relations
The elections in Japan are historic for the mere fact that a party in control of the government for more than a half a century was overturned in a dramatic fashion. What is more, the newly empowered Democratic Party of Japan is inherently more leftist than the previous party and publicly announced its interest in changing Japan’s diplomatic priorities. In a world largely defined by globalization and when international connectedness is a given standard, no state’s elections go unnoticed and Japan’s elections are no exception.
The August 2009 election remade the political landscape in Japan giving the Democratic Party of Japan (DPJ) firm control over the government as well as ousting the conservatives who had held power for more than fifty years prior. The DJP seized control of more than 300 of the 480 seats in the lower house of parliament and, in turn, assumed control of the selection of the next prime minister.
The rejection of the LDP is part of a backlash, in part, against everything associated with the business-obsessed bureaucratic networks of power seen as responsible for the financial crisis.
Reports of an end to Japan’s recession came late in August 2009 after four consecutive quarters of contraction.
The historic elections in Japan last month changed not only Japan’s political and economic structures, but also the country’s relations with several major powers, notably the United States. The question of what LPJ’s foreign policy will be is at the forefront of the minds of many in Washington and scholars alike. Hatoyama and his party are confronted with the challenge of defining a new policy toward the United States and the scope of US-Japanese relations since the LDP was perennially and outwardly recognized as pro-American. For 54 years the United States has dealt exclusively with the Liberal Democratic Party building a strong relationship based on economics and security dependence. What the future holds for Hatoyama and the DPJ is yet to be seen.