In Japan Vote, Win by Ruling Party May Be Loss for Economic Reforms

In most democracies, a decade-long economic downturn, rising unemployment, record bankruptcies and mounting suicide rates would spark a “throw the bums out” rallying cry.

But in Japan, the world’s second-largest economy, the entrenched Liberal Democratic Party is expected to weather Sunday’s election with enough support to maintain its traditional subsidy, pork-barrel and protectionist economic policies. A strong showing might even earn a mandate to roll back some reforms.

“People really don’t want to think very seriously about Japan’s problems,” said Naohiro Yashiro, economics professor at Sophia University and a member of the prime minister’s deregulation committee. “They still dream about past economic miracles and expect the bureaucrats to do something for them.”

In a snapshot of some of the issues seen nationally, the two leading candidates in Tokyo’s 7th electoral district offer a very different vision of Japan’s economic future.

Shigeru Kasuya, 74, has represented the ruling Liberal Democratic Party here since 1972. He is also acting chairman of a powerful LDP committee fighting to slow the pace of economic restructuring. “Deregulation is really being driven by foreign pressure,” he said. “We need policies that protect small companies.”

The challenger, Akira Nagatsuma, is 40, a former business reporter and a first-time candidate running for the main opposition Democratic Party who champions economic and political change.

“We have to get rid of the rotten bureaucrats and politicians,” he said. “Since the last election, the suicide rate has jumped 40% and unemployment has increased by over 1 million. Help put an end to this!”

In tradition-bound Japan, however, economic reform and political change remain a hard sell. Analysts attribute that in part to a conservative distrust of the untested and to voter skepticism that the opposition could do any better tackling Japan’s economic mess.

At a rally for Kasuya this week in a varied district that includes glitzy Shibuya and the dusty shops of Nakano, the LDP machine turned out 100 loyal supporters. Most are in their 60s, have some personal link with the candidate and are comfortable with his views that Japan’s lukewarm reforms already have gone too far.

“I’ve known Kasuya almost all my life and always supported him,” said Sempei Ono, 76, owner of a small bookstore. “Since the big guys moved in, my sales have dropped by two-thirds. It’s important to restrict the large stores, at least partially.”

A few miles away, Nagatsuma stands in a small public plaza in the Numabukuro neighborhood. No loyal supporters are in sight, and as he scrambles to shake hands with passersby, several pull their arms away or purposely cross the street to avoid him.

“It seems like most young people, perhaps all Japanese, have no real interest in politics,” said Kazuhiro Makimoto, a 23-year-old law student, watching Nagatsuma. “Some politicians talk about Japan’s big debts and economic problems, but the amounts are so huge it doesn’t mean much to me.”

While relatively high turnout is expected this weekend and 40% of voters polled nationwide remain undecided--factors that could work against the ruling party--analysts don’t expect a groundswell for economic change.

“In other countries, when the economy deteriorates, people vote for the opposition,” said Rei Shiratori, political science professor at Tokai University. “But Japanese weigh the LDP’s strong past achievements against [opposition] uncertainty. And uncertainty naturally creates fear.”

Most Japanese also deeply distrust freewheeling American-style economics and would prefer delaying economic reforms that mean job loss and economic dislocation, even if they promise significant longer-term benefits. Recently announced economic growth of 0.5%, the first in three years, has raised new hopes that Japan has weathered the worst.

The opposition has had limited success pointing out that every Japanese family now owes the equivalent of $190,000 in public debt after the LDP’s $1-trillion stimulus spree, almost certainly signaling higher taxes ahead.

But so far at least, that has been weak ammunition against the LDP’s pork-barrel politics and policies to subsidize and protect inefficient farmers and small shopkeepers.

“In the end, people who vote based on some bigger vision of our economic future will be the minority,” said Eiji Yamamoto, economics professor at Konan University.

Pork-barrel promises remain a powerful calling card in a nation where more than 10% of the population works in construction. The new Saga Prefecture airport is an example. Saga won approval for a $475-million airport largely because it was among the few prefectures without one. Now that it is open, however, fewer than 1,000 people a day are using it, given that Fukuoka airport in the neighboring prefecture has better service and connections.

“In the end nothing changes because people like my son support the LDP in hopes of getting construction jobs,” said Misao Tajika, an 82-year-old Tokyo resident.

Small shop owners also remain LDP stalwarts, and they vote in far greater numbers than young urban consumers with an interest in lower prices. A new retail law gives local governments expanded power to block large stores that raise environmental or traffic concerns. And guaranteed rice prices, huge agricultural subsidies and laws against converting farmland bolster farm support.

The variable often missed in this equation is that Japan’s best companies can walk, leaving the country further behind in the race to compete globally, said Sophia’s Yashiro.

“Companies expect higher taxes, so the better ones move their business overseas,” he said. “That leaves the ‘old-economy’ companies dependent on government subsidies.”

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Hisako Ueno in the Tokyo bureau contributed to this report.

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STAYING THE COURSE

In tradition-bound Japan, even a disgraced politician can win reelection. A1

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Japan in Hock

The Japanese government’s outstanding debt exceeded gross domestic product in 1999 as the nation spent heavily to invigorate its weak economy. Ratio of national and local government debt to GDP among major industrialized nations, in percent:

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Japan: 130%

France: 67%

Germany: 63%

Britain: 55%

U.S.: 54%

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Sources: Organization for Economic Community Development, International Monetary Fund