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Japan is getting another new prime minister this week, with Yoshihiko Noda's victory in yesterday's Democratic Party of Japan leadership race setting him up to take the top job as early as today. He becomes the country's sixth leader in five years, and cynics are already betting he'll be a one-year wonder like his four immediate predecessors. That cynicism may well be justified, though the leadership race has brought a few glimmers of hope.
Outgoing Prime Minister Naoto Kan was forced to resign after 14 months in office thanks to public dissatisfaction with his handling of the March 11 earthquake, tsunami and nuclear disaster. Quake recovery and economic policy took center stage in the leadership contest.
In this respect, Mr. Noda looks like an uninspiring choice at first blush. As Mr. Kan's finance minister, Mr. Noda became a spokesman for fiscal hawkishness, which in Japan means doubling the consumption tax to fund a looming Social Security shortfall. His "hawkishness" did not, however, extend to questioning whether another Keynesian spending spree is the best way to rebuild quake-ravaged areas. As for any other pro-growth reforms—such as putting postal privatization back on track, deregulating large swathes of the economy, immigration reform or the like—what's Japanese for "fugheddaboudit"?
Also worrying, Mr. Noda's sympathies seem to lie much more with the bureaucracy than did those of his two DPJ forerunners, Mr. Kan and Yukio Hatoyama. The DPJ rode to power in 2009—breaking the Liberal Democratic Party's 55-year near-stranglehold—in part by promising that elected politicians instead of unaccountable bureaucrats would drive policy. This marked an intellectual sea change for Japan, and in practice it has been tough to implement. Mr. Noda's views, especially on fiscal policy, are notable for their close alignment with the still-too-powerful bureaucracy, especially the Finance Ministry.
Associated Press
Yoshihiko Noda, the new leader of the Democratic Party of Japan.
And yet despair would be premature. One positive is the way Mr. Noda has come to power—by forming an alliance with popular and charismatic former Foreign Minister Seiji Maehara. Mr. Maehara comes with policy and political baggage of his own, such as support for Keynesian stimulus and the fact that he was forced to resign his ministership in March amid a campaign funding scandal. But in other respects, he could turn out to be a force for good if his leadership-race support has won him a place in the Noda cabinet.
For instance, Mr. Maehara has favored stronger security ties with the U.S.—an issue the DPJ botched badly thanks to Mr. Hatoyama's mishandling of the relocation of a U.S. base at Futenma. He also advocates joining the Trans-Pacific Partnership talks for a multilateral trade deal between Asia and the Americas. Mr. Maehara has opposed any near-term increase in consumption taxes, and even when the two politicians still were competing with each other in the leadership race this seems to have encouraged Mr. Noda to rethink his earlier support for an immediate tax hike. He now says he wouldn't necessarily raise the consumption tax right away.
Messrs. Noda and Maehara also support forming a grand coalition between the DPJ and LDP. In the best case, this could embolden reformist elements in both major parties to combine forces on issues such as entitlement reform or electricity-market liberalization. The theory is that a coalition would allow liberals within the DPJ to ditch their left-leaning coalition partners while scoring votes from what remains of a pro-growth branch in the LDP that once was loyal to Prime Minister Junichiro Koizumi. In this regard, it's notable that Mr. Noda has won against Trade Minister Banrei Kaieda, who was supported by the DPJ's populist kingpin, Ichiro Ozawa.
Mr. Noda's biggest challenge will simply be to stay in power. A leadership challenge is an omnipresent threat, and a Lower House election looms no later than 2013 with an Upper House poll due around the same time. Unexciting prime ministers with short tenures are nothing new in Japan. What is new is that voters increasingly demand their leaders come up with a policy platform and implement it. The ball is in Mr. Noda's court now to show he can deliver.
source: wsj.com
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