A shrill debate in the land of consensus - FT.

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12-04-20 12:27 AM

April 18, 2012 7:59 pm

A shrill debate in the land of consensus

By David Pilling

A few days ago, a man named Koizumi stood up in the Japanese parliament to vote against a bill. The man in question was not Junichiro Koizumi, the most charismatic and long-lasting prime minister of recent times. Rather it was Shinjuro, his 31-year-old son, who was voting against a bill to water down his fathers landmark postal privatisation. The centrepiece of Koizumi the Elders term, postal privatisation aimed to rid the government of one of the worlds biggest financial institutions. The idea was to release some Y350,000bn in postal funds from the states grasp in the hope that the private sector would figure out something better to do with it. A large slice of post office funds is recycled into government bonds, making it easier to plug the chronic deficit, or to boost spending. The idea was to rip this financial drip-feed from the states arm. The funny thing about Koizumi the Elder is that although he was wildly popular, the policies he advocated were not. As soon as he left office, in 2006, public support for privatisation, austerity and the market-oriented ideas he had advocated drained away. It became commonplace to blame him for exacerbating the wealth gap. The rejection of Koizuminomics would lead you to believe that Japan is simply drifting back to the status quo ante. There is some truth to that. If Koizumi was trying to sell the idea of a capitalism redder in tooth and sharper in claw, then the public discourse has largely turned away from that notion.
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A shrill debate in the land of consensus - FT.com

12-04-20 12:27 AM

But that is not the entire story. Visiting Japan this week, I have been struck by a number of sub-currents in the public policy debate. What is emerging is far from coherent. Much of it is downright contradictory. But the sharp, even shrill, debate contrasts with the view from afar of resigned decline. The most popular politician in Japan at the moment belongs to neither of the main political parties. Toru Hashimoto heads what is being called a third pole in politics. The mayor of Osaka, Mr Hashimoto is the closest thing Japan has to a Tea Party leader. A populist who favours small government, he has won support by bashing bureaucrats and labour unions. Many consider him a dangerous nationalist who supports patriotic education. Some have even likened the atmosphere around him to that which led to the emergence of Adolf Hitler. That Mr Hashimoto has used his Osaka base to create such a national furore suggests public opinion is in great flux. That is partly because there is such disenchantment with politics-as-usual. Yet having seemingly rejected the ideas of Mr Koizumi and then those of his successor, Shinzo Abe, a nationalist with similar ideas to Mr Hashimoto on education, people seem drawn to a charismatic mix of the two. Mr Hashimoto has also opposed the governments plan to restart nuclear power plants. Energy policy is another area of great uncertainty. Only one of 54 nuclear plants is running and next month the last one is due to shut down for regular inspection. As summer approaches, Japan faces the prospect of having no nuclear power at all. According to one poll, 80 per cent of Japanese want to stop nuclear generation altogether, though many advocate a gradual phasing out to ensure energy supplies. To put that in perspective, before last years Fukushima nuclear disaster, 30 per cent of electricity came from nuclear power. The government intended to raise that to 50 per cent. No more. The betting must be that Japan, which has virtually no energy sources of its own, will eventually turn some plants back on. But there will be no return to pre-Fukushima norms.

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A shrill debate in the land of consensus - FT.com

12-04-20 12:27 AM

That is a matter of huge importance for Japanese industry, which needs a stable supply of energy. So is the planned 17 per cent increase in electricity prices Tokyo Electric Power seeks to help defray the crippling cost of last years nuclear catastrophe. The worry is that more manufacturers, already facing a strong yen and a stagnant domestic market, will move abroad. There is also a concern that Japans current account surplus will vanish if it has to import more fossil fuel. That has added to a sense of a growing economic crisis. Yoshihiko Noda, the prime minister, is using such concerns to try to push through a rise in the sales tax. The proposed bill would increase the tax from 5 per cent to 8 per cent in 2014 and 10 per cent a year later. It is the first serious attempt to increase tax since 1997 and many consider it electoral suicide. A minority consider it economic suicide, too. Put the three together and you have something approaching an ideological war over the future direction of politics and economics, energy and tax policy. And they call it the land of consensus. david.pilling@ft.com

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