« Law, Public Policy and Economics in Japan and Australia: Reviewing Bilateral Relations and Commercial Regulation in 2009 | Blog home | Lessons for Australia – How (Japan and) other countries are dealing with current consumer issues »

business learning training articles new learning business training opportunities finance learning training deposit money learning making training art loan learning training deposits make learning your training home good income learning outcome training issue medicine learning training drugs market learning money training trends self learning roof training repairing market learning training online secure skin learning training tools wedding learning training jewellery newspaper learning for training magazine geo learning training places business learning training design Car learning and training Jips production learning training business ladies learning cosmetics training sector sport learning and training fat burn vat learning insurance training price fitness learning training program furniture learning at training home which learning insurance training firms new learning devoloping training technology healthy learning training nutrition dress learning training up company learning training income insurance learning and training life dream learning training home create learning new training business individual learning loan training form cooking learning training ingredients which learning firms training is good choosing learning most training efficient business comment learning on training goods technology learning training business secret learning of training business company learning training redirects credits learning in training business guide learning for training business cheap learning insurance training tips selling learning training abroad protein learning training diets improve learning your training home security learning training importance

Mainstream Australian media provided distressingly meager coverage of Japan’s exciting general election for the more powerful lower House of Representatives last Sunday, which saw a remarkable about-face. The centrist Democratic Party of Japan (DPJ) went from 115 to 308 seats, with allies SDP (the small leftover of the once-powerful Social Democratic Party) and the New Party Nippon taking another 7 and 3 seats respectively. Overall, these and other former Opposition parties took 340 seats, whereas the conservative ruling coalition suffered a massive defeat. The Liberal Democratic Party (LDP) dropped to 119 seats, from 300 before the election (and 296 in 2005, the previous election called by Junichiro Kozumi who then retired as Prime Minister). The Komeito dropped from 31 to 21 seats, meaning that the former ruling coalition now only has 140 seats. In short, the tables have turned almost completely since 2005, in a country (in)famous for its aversion to abrupt changes in direction.

This blog posting is the first of several thinking through this result and some implications for policy and law reform in Japan.

Newspaper coverage in English tends to suggest that this is the first time the LDP has really lost power since 1955. Commentators usually do mention its loss in 1993, but add that this was only for a year. This overlooks that the fact that the SDP led a coalition incorporating the LDP from 1994-6, which saw some significant political developments (eg a major settlement of the long-running Minamata Disease litigation). More importantly, the year the LDP was completely out of power generated important legislation ranging from measures promoting transparency in administrative procedures through to strict liability for defective products. It also laid the groundwork for further substantive law reforms in similar areas, such as the Official Information Disclosure Act of 2001 and the Consumer Contracts Act 2000.

Most importantly, the LDP’s fall from power in 1993 made them and the bureaucracy reassess their close relationship. LDP politicians realised that even once back in power, they might lose again. From that perspective, a political process more open to diverse stakeholders - including “opposition” interests - became more attractive. As part of this ongoing rethink, from the late 1990s the “deliberative council” system for law reform certainly became more transparent, and alternative law-making processes developed as well (eg private Members’ Bills).

The LDP, prompted also by the Komeito, also began incorporating many centrist policies into its own program – trying to steal the DPJ’s thunder. Such developments provide a partial explanation for the counter-intuitive situation of a conservative coalition pressing ahead with major judicial reforms from 2001,. These covered not just for civil justice (which at least some business interests also wanted), but also criminal justice (including the new quasi-jury system, with its first trial recently concluded in the Tokyo District Court).

These shifts – accommodating concerns of a wider voter base, in a more porous process serving as a back-up plan in case the LDP lost power again - seemed to be working out quite well, especially as the Japanese economy finally returned to a growth path from 2002-7. But then came the GFC and economic stagnation potentially far worse than during Japan’s ‘lost decade’ of the 1990s, because it was driven by the world-wide collapse of all Japan’s major markets for both exports and investment (including even China). Those who had already suffered from major socio-economic reforms and Japan’s banking crisis in the late 1990s became increasingly concerned about the LDP’s capacity to address these even larger challenges. One such group comprised the burgeoning numbers of “involuntary non-regular workers”, young men and others who no longer had the option of one day joining the elite “lifelong employee” cadre rather than deliberately choosing not to take up that life. (This group was highlighted in the recent lecture on "flexicurity" presented at Sydney Law School by former Todai Law Dean, Emeritus Professor Kazuo Sugeno). Unsurprisingly, despite LDP-led law reform in 2007 aimed at part of this group, the DPJ was able to attract a much higher proportion of younger voters.

All this means that we may not witness now huge changes in both the style and substance of law reform in Japan. This will not (merely) be because the DPJ government is new and relatively inexperienced, or due to reactionary forces, but also because some significant changes were already afoot. It is interesting, for example, to compare the pre-election manifestos of the LDP and the DPJ (themselves one indication of broader transformations in Japanese politics over the last decade) and other policy statements. On the other hand, it is certainly worth examining the DJP’s manifesto “promises” to get a better idea of the new government’s likely legislative program for the next few years:

The DPJ's policy summary (not necessarily identical to their manifesto distributed during the election compaign) is still currently only available in Japanese. But it states policies from areas such as:
• Cabinet (eg re the Ainu, now recognized as an indigenous people)
• Children and women (eg work-life balance, or allowing married couples to retain separate surnames)
• Consumers (eg strengthening local government Consumer Lifestyle Centres, dealing with huge volumes of complaints and requests for information)
• Administrative reform (eg limits of “amakudari [descent from heaven]”, ie retiring from government into private sector jobs, increasingly commonplace also in the US and NSW!)
• Local-central government relations (eg greater devolution and citizen involvement in governance)
• Political reform (eg reducing lower house numbers and limiting ‘political dynasties’)
• Legal affairs (rethinking the new “Law School” and legal examination system introduced from 2004, criminal justice improvements such as videotaping interrogations and possibly life sentences instead of the death penalty, a second round of administrative litigation reforms, possible multiple nationality even after minority at least for children of international marriages)
• Foreign affairs and security (especially strengthening relations with Asia)
• Finance (including a new law on publically listed companies)
• Tax (including reviews of alchohol and beer taxes, and tax litigation processes)
• Health and welfare (eg possible no-fault compensation schemes, and measures for hepatitis victims)
• Labour (eg securing better conditions for non-regular workers, preventing and resolving disputes based on the Labour Contracts Act)
• Agriculture (eg a traceability system for food products, and linked quarantine inspections)
• Construction and transport (eg a Road Traffic Basic Law)
• Environment (eg meansures to resolve some remaining Minamanta and Kanemi Rice Bran mass claims, as well as “sick houses” disputes and asbestos problems)

Later postings on this blog will provide more detail, and report on how the new government does or does not follow up in these and other areas, but many of the topics just listed have already been introduced in previous postings on this blog, the East Asian Forum blog (www.eastasiaforum.org), or my other readily available work (eg reproduced at www.ssrn.com). Meanwhile, comments are most welcome, especially from ANJeL members!

Comments

Two areas of law reform immediately spring to mind.

First, as shadowed above, local governance and decentralisation. The DPJ is lukewarm on the idea of a quasi-federal system of large regional blocs to replace the existing prefectures, which had been gathering significant momentum under the LDP. The DPJ instead favours devolution of powers directly to the municipal level, and doing away with the prefectures altogether. We might therefore expect to see more powers go to "designated special cities" such as Fukuoka, Kobe or Sendai and their sattelites, and fewer powers to the prefectures that surround them.

Second, the DPJ has previously stated its discomfort with the judicial powers exercised by the Japan Fair Trade Commission. As these powers are due for review next year, we may see the DPJ government attempt to transfer them to the Tokyo High Court.

(1) I think they will have difficulties funding their election promises other than going further into debt. A consumption tax hike is on the cards which is unlikely to be popular, fair, or good for the economy. I saw a Japanese news show looking to Australia to see how "easy" it was for us to introduce the GST. Yeah right!

(2) the dynamics of an aging society haven't changed. The DPJ will still have to find a way to maximise welfare while minimising its own commitments. I don't think there will be any radical about-face from the trends toward privatisation, deregulation, and devolution in social security which began long before Koizumi. Nevertheless, the extermination of many of the reformist "Koizumi Children" suggests that the electorate has indeed experienced "reform fatigue", as per Rikki Kersten (ANU) on Rear Vision (http://www.abc.net.au/rn/rearvision/stories/2009/2660890.htm So expect some backpedalling.

(3) I tend to neglect politics in Japan, especially now that the Japan Considered podcast is off the air, but I take the anti-bureacracy platform as mainly noise. I don't subscribe to the all-powerful construction state view these days anyway.

(4) Despite the above, I know Kuniko Inoguchi had a hell of a time with the Ministry of Finance in getting the initial child allowance increases through, so the mandate the DPJ has from its resounding victory on the basis of social security and anti-bureaucracy platforms should help with that at least. Also, a change of administration is always good to clean out the cobwebs (I may have stolen the line from someone else)

(5) regarding family policy (i.e. pronatalism), you could take the child allowance and free education as a shift in focus to reducing the cost of children, in contrast to the LDP's reforms (and platform this election) which focused more on work-life balance, for example aggressive subsidized privatisation of child care services and childcare leave. Whether the DPJ can pay for this is questionable, and they don't get the added bonus of more working women when the economy picks up and there are massive labour shortages. BUT, at least no big market failures like ABC learning!

(6) no need for a coalition partner like SDP or Komeito to push social policy, so could actually be less generous than LDP-Komeito when the policies get number-crunched.

(7) finally, the obvious observation that social security issues were a big part of the swing against LDP, especially the pensions fiasco. The only LDP winner from this may be Masuzoe, who had at least some credibility on this issue, and is my pick for next leader of the LDP.

As regards corporate law, the DPJ has declared its intent to strengthen the corporate governance of public companies. However, the details of its policy in this respect are not specified in its published policy list:
http://www.dpj.or.jp/policy/manifesto/seisaku2009/09.html. According newspaper reports before the election, one idea of theirs is a mandatory requirement for outside directors, while another is the idea of including employees' representatives among the statutory auditors (kansayaku - separate from the financial auditors). As the two ideas are in conflict with each other, the former being responsive to capital markets and the latter rather not, it is yet to be seen which will prevail.

It is probably no coincidence that the Consumer Agency officially started business on the day after the election result became known [see our separate Blog posting - "Lessons for Australia"...]. The bureaucrats probably feared the Democratic Party of Japan would de-rail their plans to have the new agency up and running around Oct/Nov (already a delay of 6 months)hence the seemingly sudden decision to start business from Sept 1.

Now that the DPJ has acquired the mandate to rule it will be interesting to see what changes, if any, they make to the Consumer Agency. For example, according to their vision of an independent Consumer Agency, the Cabinet Office would lose much of its ability to influence how the Agency operates in practice. They also wanted to make the consumer consultants working in the government-run Consumer Centres public servants, thereby improving their job security and salary conditions. [Note also the DPJ manifesto policy statements about numbers of civil servants and improving conditions for non-regular employees.] Some changes are inevitable but how things will play out is still very much up in the air.

The landslide result which came about as widely predicted was a matter of the DPJ having 33.5 million votes to the LDP's 27.3. That is a substantial win, greatly magnified by the single member constituency system which produced 308 seats for the DPJ and only 119 for the LDP. The LDP's weakness now is perhaps not so much in its loss of voter support as in the thinness of talent at its disposal. Is the DPJ much better? It will have a large number of relatively inexperienced members. But in one repect it may be significantly stronger. That is in having a tough,decisive and experienced political puppeteer in Ozawa Ichiro. If Ozawa is bent on breaking the traditional power of the bureaucrats, as Hatoyama claims to be, it is likely to result in an increased rate of change.
On foreign policy there are apparently rumours now that the DPJ will take a much more active role in the six-power talks, aligning Japan with South Korea, China, Russia in a more tolerant stance towards the DPRK, that Japan will be more active in UN peacekeeping and that there will be a move to press the US to move the marines etc on Okinawa to Guam. This might all turn out to be post-election speculation but there does seem to be an expectation that the DPJ will aim to shake things up, and not in ways congenial to the United States.

Clearly the Japanese people are willing to put up with a lot. But even they have their limits. The LDP hasn't delivered in many years. I suppose that Koizumi's sound bites and media savvy put off the inevitable. However, the question now is whether an aroused electorate will be forbearing with a bunch of inexperienced politicians who have made large promises to the voters.

The DPJ claims that they want what amounts to a revolution in the way the country is governed. They want to break up the post war Iron Triangle by reforming the bureaucracy. The question is whether they will be able to do so. The bureaucracy is made up of experienced, intelligent and savvy individuals. They are Japan's 'best and brightest'. Any politician who has tried to buck the bureaucracy has paid a heavy price. Right now the odds have to be strongly against the DPJ to be successful.

They also face the daunting challenge of regearing the economy away from its heavy dependence on exports. They face not only demographic problems but an economy where too many of the younger generation are stuck in part time or dead end jobs where they fail to learn crucial job skills. (Unemployment among the 15-24 cohort is currently 9.9%).

Meanwhile the future of the 'born to rule' LDP is uncertain. Will they go the same way as their counterparts, the Christian Democrats in Italy?

At this moment an astrologer could probably provide as good a forecast of the next year in Japan as anyone else.

Craig Freedman

The DPJ government has now tabled legislation that will create three new vice ministers and twelve more parliamentary under-secretaries, further boosting the Cabinet Office functions in particular (see http://search.japantimes.co.jp/cgi-bin/nn20100115a5.html)

Overall it proposes 61 new statutes (see http://search.japantimes.co.jp/cgi-bin/nn20100115a4.html):

"Friday, Jan. 15, 2010

Ruling bloc prepping 61 bills
Kyodo News

The government plans to submit 61 bills to the Diet during the regular session that starts Monday, including proposals on some of the Democratic Party of Japan's major campaign pledges, according to ruling lawmakers.

Included in the legislative program are bills that would provide monthly allowances to child-rearing families, make public high school education effectively free and increase the number of lawmakers serving in senior government posts — all of which were spelled out in the party's election manifesto.

Justice Minister Keiko Chiba plans to submit a bill to revise the Code of Criminal Procedure to review the statute of limitations for murder and other serious crimes, ruling coalition sources said.

Thirteen treaties are also likely to be submitted during the 150-day session.

Other bills would set up a venue for the central and local governments to discuss decentralization, promote greater devolution of power to regions and revise the Civil Code to allow married couples to retain their original surnames.

One of the bills is aimed at providing better protection for temporary workers.

A measure to let permanent foreign residents vote in local-level elections, which the government has envisaged submitting this session, is listed among 16 bills still under consideration, apparently due to the need for further coordination within the government.

Shizuka Kamei, the financial services minister and head of coalition member Kokumin Shinto (People's New Party), has come out against the suffrage proposal.

Two bills will be carried over from last year's extraordinary session, including one to enable the Japan Coast Guard to inspect ships suspected of carrying banned cargo in accordance with a U.N. resolution punishing North Korea for its nuclear test last May.

Chiba asked the Legislative Council last October to discuss how to review the statute of limitations system. The bill to revise the criminal procedure code is expected to be finalized after she receives the panel's report, possibly next month."

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Enter the code shown below before pressing post

About the Blog

Japanese Law in Asia-Pacific Socio-Economic Context
More