Leading article: Japan needs a breath of political fresh air

A new administration can begin to break the economic deadlock

Tuesday 14 July 2009 00:00 BST

The sun appears to be about to set on a long political era in Japanese politics. After a resounding defeat for his Liberal Democrat Party (LDP) in local elections in Tokyo, the Japanese prime minister, Taro Aso, has given into pressure and called early general elections for next month. Opinion polls point to a decisive victory for the opposition Democratic Party of Japan (DJP). The LDP, which has been in office more or less continuously for half a century, seems to be finally on its way out.

Japan is a consensual and paternalist society and its democratic politics have long been consensual and paternalist too. Factions within the LDP, rather than rival political parties, have tended to struggle for pre-eminence. And the political class, usually closely allied to the leaders of Japan's business community, made decisions on the country's future behind closed doors. The electorate has been largely kept at arms length.

This top-down model of governance delivered stunning economic growth in the post-war years. But it has been under intense strain for some time now. Since Japan's stockmarket and property bubbles burst in the late 1980s the country has experienced sluggish growth. And it is suffering even more grievously in the present global downturn than America and Britain. GDP is forecast to shrink by 6 per cent this year.

True, there was a a brief recovery in the years before the credit crunch hit two years ago thanks to an export boom. But with its Western customers struggling under heavy household debts, Japan will not be able to export its way out of trouble this time. The country is in serious danger of suffering yet another "lost" economic decade. And making Japan's outlook worse are the fiscal pressures of its ageing population. In this ominous context, a fracturing of the traditional consensus in politics could be beneficial. Economic sclerosis has stemmed from political sclerosis in Japan. The LDP failed to take decisive action to restructure Japan's banks after the property crash two decades ago, mainly because of its cosy relationship with the bankers who ran them.

The government also put pressure on the financial sector to continue lending to large, influential, but failing companies. The result has been an economy scattered with "zombie" banks and corporations. And in all sorts of other areas, from infrastructure spending to the regulation of nursing care, difficult decisions have been postponed or ignored.

The DJP has promised less bureaucracy, more decisiveness on policy and a push to reform the welfare system but, in truth, it is no radical force. It leaders, like those of the LDP, are drawn from the political caste that has ruled Japan since the end of the American occupation. Some suggest that it is little more than a glorified faction of the LDP. And while voters are weary of Mr Aso and his colleagues, they remain unenthused by the DJP and its uncharismatic leader, Yukio Hatoyama.

Yet it is hard to regard the prospect of a change of government in a country as politically and economically stagnant as Japan as anything but a breath of fresh air. A new administration might not be the solution in itself to the country's problems, but it could be the first step.

After all, for a new day to begin, the sun has to go down, at some point, on the old one.

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