The Illness That Success Has Created

Japan’s long-running depression is widely regarded as a purely economic problem. It is not. The real cancer eating at Japan is the continuing dominance of one corrupt, ineffectual and faction-ridden political party. As long as the Liberal Democratic Party retains its hold on political power, an early economic recovery is out of the question.

The 43-year history of Japan’s one-party rule by Liberal Democrats can be summarized thus: The original advantages of strong majority support, legislative-executive solidarity and firm political direction have given way to popular apathy and governmental gridlock. The only firmness shown has been the single-minded determination of party bosses to keep themselves and their numerous associates in power.

The symptoms of Japan’s one-party sickness are unmistakable: a steady hardening of the political arteries, with increasing lack of mobility; anomie; consistent memory failure; and a stubborn refusal to accept new treatment. Unfortunately, Japan’s one-party sickness is highly contagious. It has already badly damaged the whole nation. It also has spread to other East Asian countries in two ways: first, by the inability of a rich but ailing Japan to help its neighbors at a time of crisis; and second, by the fact that their respect and emulation of a once triumphantly healthy Japan led them all, in greater or lesser degree, to catch its current sickness.

Japan badly needs treatment, and there are new prescriptions available. Yet, the difficulty of effecting change in Japan’s one-party system is magnified by the fact that it was imposed by the country’s best and brightest, whose success at planning the technological, postwar future for their restored democracy paradoxically revived the inherited Confucian docility of the voting public. It is taking an understandably long time for voters to realize that they are now in a different ballgame, with new balls, new bats and, indeed, a radically changed playing field. The “economic miracle” happened yesterday, and it is gone.

This is not to say that the miracle didn’t happen. The much-denounced “iron triangle” of bureaucracy, politicians and big business was far from rusty during almost 30 years of high growth. With intelligent, alert new managers and a young, skilled work force, Japan’s combination of improved technology and aggressive international marketing, backed and, in some cases, led by the enlightened industrial policy of a bright bureaucracy, swept away the competition.

This “miracle by design” was skillfully crafted. Its principal architect was Japan’s postwar prime minister, Yoshida Shigeru. Working with talented fellow bureaucrats who later became his successors, Yoshida created a new economic vision for Japan as a merchant country, its big businessmen making and selling its goods to the world, while a protective government restricted foreign competition. The new postwar world for Japan was based on three premises. The first was bureaucratic governance. Yoshida’s second premise was the supremacy of the Liberal Democrats as the safe, conservative party that could deliver the goods to Japan’s voters.

The third premise was the continuing Cold War alliance of Japan and the United States. The United States would ensure Japan’s security in return for Japan’s constant support as both an unsinkable military base and the Asian industrial stronghold of world anticommunism. Americans also agreed to tolerate Japan’s burgeoning export economy, with its corollary of import protectionism.

The Liberal Democrats took it upon themselves to see Yoshida’s grand design through. They stood for a bigger gross national product, steady jobs and perpetuation of the economic miracle. Barring a few bad spots, they won election after election. They were powerfully assisted by gerrymandered electoral districts, which gave Japan’s rural electorate far greater political weight than more skeptical urban voters. The Liberal Democrats naturally repaid rural loyalties with a profusion of highways, new shinkansen (bullet trains) and dams, which incidentally served to keep the party’s close friends in the construction industry quite happy.

By the ‘90s, however, these premises had tottered. With the end of the Cold War, the Japanese-American trade-off looked rather thin. No longer obsessed with anticommunism, the Americans had turned back to business. They were now competing with a vengeance. While Toyota, Sony and other stalwarts of Keidanren, Japan’s most powerful business lobby, continued to prosper as international corporations, a whole new industry of software and the Internet had sprung up in California’s Silicon Valley and elsewhere, leaving Japan’s once-vaunted hammer-and-nail product-makers far behind. Competition from East Asian neighbors intensified, and Japanese businesses began to move their plants offshore.

Globalization had begun to poke holes in the once-sealed hemisphere of Japanese finance. Bureaucrats in the Finance Ministry could no longer control the ebbs and flows of capital. While new Japanese entrepreneurs and foreign competitors were stifled by bureaucratic overregulation, Japan’s conspicuously underregulated banks floated adrift and rudderless, awash in a sea of unpaid speculative loans they feared to make public.

Nonetheless, Liberal Democrats continued to play what Americans contemptuously call “statehouse politics.” Ministries tried to keep their favorite constituencies happy with pork-barrel favors, seemingly unaware that the country wallowed in an unprecedented depression. Consumers remain unwilling to spend, new businesses are unable to find money and the possibility of intelligent Keynesian spending by government to stimulate the consumer economy is buried in an expensive mass of concrete dams, bridges and transportation systems built over the years to keep local constituencies happy.

At similar crisis points in modern history, it has not been unknown for a country to scrap partisan politics for a time and form a government of “national unity.” Such a government could put through a sweeping settlement of the staggering bank debt, restore public confidence with a combination of meaningful tax cuts and sensible government spending and move quickly toward accepting the fact of a globalized economy. With public support, the government could take a leading role in helping neighboring Asian economies. The prospects for any such decisive action are bleak, however. For if Japan is the land of the storied consensus principle (wa above all), it is also a political arena in which mediocrity has become the greatest common denominator--Prime Minister Keizo Obuchi is a case in point--and politicians and bureaucrats are trained to fight to the end for petty local or factional issues and do their best to clobber anybody who comes up with a good idea.

But to set a new course requires both strong leadership and a public aware of the country’s problems. These are not unknown quantities in Japan. The men of the 1868 Meiji Restoration managed one of the modern world’s great revolutions from within, a revolution achieved with vigor, imagination and argument.

Alas, again. Their breed is probably as extinct as the American Founding Fathers. Reversing the time sequence, the modernizing Meiji Japan of Prime Minister Ito Hirobumi and statesmen Okubo Toshimichi and Okuma Shigenobu seems to have slipped back a couple of centuries into the seclusion of the Tokugawa shoguns. Listen to most prominent bureaucrats these days, and you will find Tokugawa Ieyasu and his 17th-century henchmen talking. For, in the end, their idea of a closed and selfish country has won. Back to the Confucian future.*