Pushing on a string

During its long “lost decade,” Japan became painfully acquainted with the concept of pushing on a string.

In monetary policy, pushing on a string is when a central bank finds itself unable to reverse an economic downturn with customary monetary policy tools; famously, the Bank of Japan slashed nominal interest rates to zero without success in reversing the slump.

Aso Taro and the LDP may be facing similar circumstances a month into the Aso premiership (an anniversary Mr. Aso celebrated in style).

Over the course of 2008, the LDP has struggled to reverse dismal poll figures that show the public ready to abandon the LDP and give the DPJ its first chance to form a government. Former Prime Minister Fukuda Yasuo withered in the face of declining popularity, doing little but a cabinet reshuffle late into his government after months of grueling battles with the DPJ and within his party. Mr. Aso was supposed to be the key to reversing the slide. He was supposed to ride into office on a wave of support from not just within the LDP but from the public at large. But not only was his initial public support soft, but it has done nothing but slide. Mainichi‘s latest poll recorded a nine-point drop in Mr. Aso’s public approval rating, falling to 36%. The same poll gave the DPJ a twelve-point lead over the LDP when it comes to which party respondents want to win the next general election. Support for the LDP fell five points to 36%, while support for the DPJ rose eleven points to 48%. As before, respondents continued to prefer Mr. Aso over DPJ President Ozawa Ichiro as prime minister, but it seems that the LDP’s attacks on Ozawa Ichiro have had little impact on public support for the DPJ.

Of course, the public has little enthusiasm for the DPJ in and of itself. A recent Yomiuri-Waseda poll found widespread discontent and disappointment with both the LDP and the DPJ. The poll found that 78% of respondents are “dissatisfied” with the LDP and 79% are dissatisfied with the DPJ, while 69% are disappointed with the LDP, and 50% disappointed with the DPJ. Respondents were evenly split on whether they have hope for both parties. Without a look at the survey itself, I have no idea what the difference is between disappointment and dissatisfaction. I’m not certain whether these numbers actually tell us anything other than what we already know: that there is widespread disillusionment among Japanese voters about the state of Japanese politics going back years, if not decades. The LDP can take little pride in the finding that the public’s expectations for the DPJ are just as low as its expectations for the LDP.

The upshot leads us back to the idea of pushing on a string. In the teeth of widespread public disillusionment with the status quo, there is little Mr. Aso can do to extract himself and his party from its predicament. Despite its first stimulus package and the promise of a second, the Mainichi poll recorded a drop in confidence in Mr. Aso’s policy line (a shift found in other polls, as noted by Nakagawa Hidenao). The DPJ has refused to bite on foreign policy, and even if it did, the public has little interest in whether Japan continues refueling, at least compared with the public’s interest in the state of the economy. It’s possible that the second stimulus package, set to be formalized next Monday, will reverse the trend. The plan will contain a host of income and municipal tax cuts, tax cuts for homeowners, tax cuts for businesses large and small, and support for regional public works. The plan may also contain provisions to support the conversion of irregular employees to regular employees, a plan that theoretically would appeal to Mr. Aso’s Akihabara base. But what reason is there to think that a second wave of goodies for the public will lead to a decisive shift in public opinion? It will take some time before voters begin seeing the fruits of the government’s efforts, and in the mean time they will have plenty of time to reflect on the legacy of LDP rule and the gathering global gloom.

What we’re left with is Mr. Aso’s feeble attempts to illustrate that he understands the hardships facing Japanese citizens.

The prime minister is scheduled to decide on the timing of a general election by month’s end. I will be surprised if he opts to hold one within the year. Why would he, when he has eleven months to keep pushing on the string of limp public support for the LDP in the hope of a breakthrough?

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