He leaves behind a country tottering on the brink of ruin. The OECD has announced that, like the reappearance of cancer after remission, Japan may once again experience deflation in 2009. Consumer confidence is at a record low. The question on the table now is not whether Japan will be able to avoid recession, but how long the recession will endure. The government’s latest stimulus package is on hold until January, leading some within the LDP to wonder whether Mr. Aso has a handle on the situation. (The Economist summarizes the bad news here.)
The Japanese people, it seems, are battening the hatches. As Blaine Harden wrote in the Washington Post Thursday, Japanese citizens are not particularly enthusiastic about the government’s announced tax cuts, an attitude that might change when they start receiving payments, but then again, it might not. The Japanese public has been through this before, and rather than wait for the government to do the right thing, it seems that citizens are preparing to take care of themselves, whether by stuffing yen under the mattress, deferring big purchases, or doing a bit more shopping at the hundred yen shop. Little surprise that there is little taste for structural reform or any other kind of shock therapy.
Mainichi has released the results of its latest annual survey of livelihoods. Mainichi surveyed 3371 respondents in the Kanto and Kansai areas, and found that the level of insecurity among those surveyed is the highest since 1998. More importantly, support for the institutions of “Japanese-style” capitalism has grown: respondents who favored the protection of the seniority system of compensation rose six points to 22.3%, and belief in the value of meritocracy fell nearly nine points to 41.4%. Citizens seem less interested in Nakagawa Hidenao’s argument that Japan will be able to grow itself out of its problems than in being sure that they will have enough in their old age. They are not interested in promised handouts or, for that matter, talk of consumption tax increases to come. It seems that what they want is quite simple: some modicum of economic security and some acknowledgment on the part of the government that things have gone horribly astray, that the quality of life is withering. They will not be comforted by Mr. Aso’s pep talks concerning the “latent power” of Japan or the DPJ’s promises to put lifestyle first.
Mr. Aso may yet pull off an electoral victory next year — it is increasingly certain that the next general election will not be held before April 2009 — but a general election will not substantially alter the situation (even with a DPJ victory, although a DPJ victory would at least ensure that the same party controls both houses of the Diet for the next several years).
In case there was any lingering doubt, the Koizumi era is over.
Little wonder that Japanese are hoping for an Obama of their own: the political system is broken and the economy is faltering. Neither the LDP’s nor the DPJ’s performance in the face of crisis has been particularly impressive. The DPJ’s greatest strength remains that it’s not the LDP, and even that assertion is increasingly questionable. Japan looks increasingly set to decline steadily, unable to take decisive steps to restore national dynamism. This is the bakumatsu, but with few signs of a restoration to come, despite Ozawa Ichiro’s determination to be the vehicle of that restoration.
Perhaps Japan should hold a lottery to pick a new ruling elite, choosing from among the eminently sensible housewives of Tokyo. I don’t see how they could be worse than the status quo.