The Tokyo Foundation for Policy Research


The Tokyo Foundation for Policy Research

Whither Japanese Politics in the Post-Ozawa Era?

August 9, 2012

The battle over a plan to double the consumption tax climaxed in late June and early July, with the passage of the government's tax bill in the House of Representatives and the defection of Ichiro Ozawa and 48 followers from the ruling party. Overseas observers may be shaking their heads, puzzled over yet another senseless Japanese power struggle. But unlike most of the political battles and standoffs of recent years, this one actually culminated in the triumph of good sense and good policy.

Transcending Partisanship to Avert Disaster

The issue is fairly simple. Japan's public debt has swollen to more than 200% of its gross domestic product, the highest ratio of any country in the world. The Japanese government needs to take decisive action to rehabilitate its finances if it wants to avoid a Greek-style debt crisis. This past spring, the cabinet of Prime Minister Yoshihiko Noda, president of the ruling Democratic Party of Japan, began to make good on its promise of "integrated reform of social security and taxes" with a bill that would incrementally boost the nation's consumption tax from 5% to 10% by October 2015.

On the tax hike, unlike most issues, the DPJ was able to enlist the support of its chief rival, the Liberal Democratic Party. The LDP had opposed virtually every government initiative since it lost its decades-long hold on power in 2009, but it was prepared to make an exception on the consumption tax, having actively advocated an increase itself. After intensive negotiations, the DPJ, LDP, and New Komeito were able to reach an agreement on a rate increase, and on June 26 the House of Representatives passed the tax bill by a large majority. The legislation now goes to the House of Councillors, which is expected to approve it some time in August.

Passage of the tax bill will be a political achievement without precedent in postwar Japan. Never has the National Diet imposed such a drastic tax increase on the public without an offsetting decrease in some other tax. Galvanized by the unfolding European debt crisis, the major political parties were able to come together on a rational policy response to prevent a similar disaster in Japan.

Mutiny in the DPJ

Ironically, the bill also triggered a revolt within the ruling DPJ. In the June 26 lower house vote, 57 members of the ruling party voted against, while 16 more abstained or were absent. The dissenters—including former Prime Minister Yukio Hatoyama who headed the first DPJ cabinet—were predominantly allies of former DPJ President Ichiro Ozawa. A few days after staging this revolt, Ozawa formally resigned from the DPJ to form his own party. He was joined by 38 lower house and 12 upper house politicians.

As Ozawa would have it, his group abandoned the DPJ because the party broke faith with the voters by violating its 2009 election manifesto, which detailed a policy program with no mention of a tax increase. But practically no one accepts this rationale at face value. The simple truth is that Ozawa seized on the tax issue—always an easy target for voter discontent—as a pretext for bolting the DPJ once it became clear that he had lost the party's internal power struggle.

The rancor between the Ozawa camp and the DPJ mainstream runs deep, and it probably accounts for the new party's long and ungainly name: Kokumin no Seikatu ga Daiichi (People's Life Comes First). While an unusual name for a political party, it is neither strange nor unfamiliar as a political catch phrase—in fact, it is identical to the slogan under which the DPJ campaigned successfully to unseat the LDP in 2009—when Ozawa was the DPJ's secretary general and chief election strategist. The decision by Ozawa's splinter group to adopt the phrase verbatim as the name of their new party was surely calculated to rankle the DPJ leadership.

The Ozawa Odyssey

To understand Ozawa's recent behavior, one needs to examine it in the context of his long political career.

Ozawa was 27 when he was first elected to the lower house as an LDP politician, filling the seat left empty by the unexpected death of his father. A favorite of then Prime Minister Kakuei Tanaka, he joined the ranks of the party elite and rose rapidly through the ranks. In 1990, he was appointed LDP secretary general, ascending to the ruling party's second most powerful party office (after that of the president) at the young age of 47.

After that, however, Ozawa's began to find his ambitions thwarted. While serving as secretary general, he lobbied unsuccessfully for electoral reform. Then he lost his bid to seize control of the LDP's largest faction, the Keiseikai (formerly the Tanaka faction). Outmaneuvered by his rivals within the LDP, Ozawa made a daring move and jumped ship. So began a long, meandering political odyssey that may finally be drawing to an end.

In June 1993, after his failed internal power grab, Ozawa seceded from the ruling LDP, along with 43 followers from the lower and upper houses combined. In the general election held the next month, the scandal-ridden LDP lost its lower house majority for the first time in decades, though it remained far and away the largest party. Ozawa put together an anti-LDP coalition from an improbable patchwork of smaller parties, including the Japan Socialist Party and the Komeito, and the coalition formed a cabinet under Morihiro Hosokawa. But this inherently unstable government collapsed after less than 10 months, leaving the LDP in charge again.

Ozawa's quest for power continued. In 1994 he consolidated the opposition forces into the New Frontier Party, launched with 178 lower house and 36 upper house members, determined to unseat the LDP once again. But the party lost seats in the 1996 general election and quickly disintegrated as its members rebelled against Ozawa's leadership. In December 1997, Ozawa blithely dissolved the NFP and founded the Liberal Party from a group of 54 loyal minions. In 1999 he made another bid for power by entering into a ruling coalition with the LDP—the same party he had bolted in 1993. That coalition collapsed after just over a year, and Ozawa once again found himself in the opposition.

By 2001 the Liberal Party's strength had been reduced to 30 seats in the lower and upper house combined. Still, Ozawa persisted in his quest. In 2003, his tiny Liberal Party now expediently merged with the fast-growing opposition Democratic Party of Japan, which already held 100 lower house seats. After hitching a ride aboard the DPJ, he lost no time taking the wheel. Ozawa became party president in 2006.

Ozawa was back, and at the helm of the biggest opposition party. His next goal was clear: Oust the LDP and seize the reins of government. Setting his sights on the next general election, he revamped the DPJ platform with voter appeal in mind. The new manifesto rejected any increase in the consumption tax, which the DPJ had previously supported, and offered voters a new child allowance and other benefits without explaining how they were to be financed.

Meanwhile, the people had lost all patience with the LDP and its policy failures, having suffered through three ineffectual prime ministers in as many years. By 2009, a change of government seemed inevitable. Then, in May 2009, with a general election looming, Ozawa found himself at the center of a fund-raising scandal and was forced to resign as party president. With Yukio Hatoyama at the helm, the DPJ won the election by a landslide and swept the LDP from power.

As the party's campaign director, Ozawa is widely credited with recruiting and grooming dozens of fresh new faces to run as DPJ candidates. This may have enabled the DPJ to win the election, but it also enabled Ozawa to build up his own factional strength, which some estimated at about 120 following the election. With so many followers, Ozawa remained a powerful and often destabilizing force behind the scenes under three successive DPJ prime ministers—Yukio Hatoyama, Naoto Kan, and Yoshihiko Noda—notwithstanding his indictment on criminal charges. Hatoyama was fairly pliable, tapping Ozawa to be the party's secretary general, but Kan and Noda were both defiant. And when the majority of the DPJ rallied behind Noda's decision to raise the consumption tax, rejecting Ozawa's political pressure tactics, he knew it was time to jump ship again.

Of course, Ozawa maintains that his rebellion was motivated by a principled opposition to the consumption tax increase. Yet until fairly recently, Ozawa was a staunch supporter of a hike. He facilitated passage of the original consumption tax bill as deputy chief cabinet secretary under Prime Minister Noboru Takeshita, and under the Hosokawa cabinet he championed a scheme for a "national welfare tax" designed to raise the consumption tax rate. It was only after he took over as head of the DPJ that his priority shifted to pandering to the masses in a bid to gain Diet seats in the next general election.

In terms of his approach to politics, Ozawa has been consistent from first to last. Like the great faction builder Kakuei Tanaka, he has remained focused on numerical strength as the key to power, reminding us time and again that "in a democracy, the majority is always right." His basic modus operandi has been to form a new party with a small group of loyal followers, team up with a larger party or parties, take over, and repeat as necessary. Ozawa's latest defection is completely consistent with this pattern.

But by repeatedly placing numerical advantage over sound, rational policy, Ozawa has lost all credibility as a national leader. Public support for his new party is hovering around 10%, according to most major opinion polls. Ozawa has spent 20 years creating, destroying, and merging political parties in the pursuit of personal power, but his political peregrinations may at last be approaching a dead end.

Outlook for Japanese Politics

What does the next chapter in Japanese politics hold in store, now that Ozawa has left the DPJ? The focus shifts to mid- to late August, when the consumption tax bill is expected to become law with its passage through the upper house. The government must call a general election no later than August 30, 2013, when the current members' terms expire, but some would like the election to be held much sooner. The LDP wants Noda to dissolve the Diet as soon as the consumption tax bill is passed. Noda has yet to commit himself.

At this point several options are possible. Noda could dissolve the Diet in August, as the LDP wishes, or he could do so after convening an extraordinary Diet session this fall. He could also wait until the Diet approves the budget and other agenda items in next year's ordinary session, then call a lower house election to coincide with the July 2013 upper house election. It is too early to say which of these options Noda will choose.

One thing we can say with assurance, however, is that the 2009 regime change has failed to live up to voters' expectations. Given the government's dismal approval ratings, it is hard to see how the DPJ can secure a lower house majority in the next general election, whenever it may be held.

That said, voter disillusionment with the DPJ has not translated into support for its major rival, the LDP. Swept from power by public indignation in 2009, the LDP has done little since then to revamp its policies or inject new blood into its leadership. Instead it has wasted its energy on and blocking the DPJ government at every turn. Having made no real progress at self-reform, the LDP has been unable to regain the voters' trust. As a result, the LDP's chances of winning more than half the seats in the lower house look dim as well.

In short, Japanese voters are disillusioned with both of the major parties. In a number of recent opinion polls, more than half of respondents have classified themselves as independents with no party affiliation or loyalty. This disaffection has created an opening for a "third force," whose uncrowned leader is Osaka Mayor Toru Hashimoto, a former lawyer and television personality. In just a few years, Hashimoto's Osaka Ishin no Kai (Osaka Restoration Association) has made dramatic gains in and around Japan's second-largest city, and it is now setting its sights on entering the national arena in the next general election. Other local political leaders are moving in a similar direction, raising expectations for the emergence of a powerful new party in advance of the coming election.

Democracy at a Crossroads

In 1994, Japan adopted a new lower house electoral system, modeled on that of Britain's House of Commons. By replacing the old multiseat districts—which sustain a multiplicity of small parties—with a system combining single-seat constituencies and proportional representation, the architects of reform hoped to lay the foundation for the alternation of power between two major parties. The reform has had an effect, and in the course of a few elections, the LDP and the DPJ have gained control of more than 80% of the lower house. In 2009, the LDP finally relinquished control of government, and the DPJ came to power.

Unfortunately, the advantages of a two-party system seem much less clear today, in the light of the government's dismal performance since the DPJ's takeover. Widespread disappointment with the emerging two-party system is manifested in the dramatic increase in independent voters and the meteoric rise of a "third force" in certain parts of the country.

It seems likely at this point that the next general election will be a three-way battle among the DPJ, the LDP, and the "third force." And it may well turn out that none of the three secures a majority on its own. In that case, a coalition of some sort will be necessary in order to form a stable government.

The voting public will decide, of course. But the criteria by which such decisions are made have been changing rapidly since around 2000. Increasingly, people view politics as entertainment and look to political leaders for drama, excitement, and quick results. The best way for a rising young politician to build support is by making splashy TV appearances and playing to gallery.

Politics operates in a realm of its own. Our leaders make difficult decisions pertaining to the budget and national policy away from the clamor of everyday life, and politicians need time to educate the people and build support for their decisions. But nowadays the trend is toward year-round campaigning with policies that pander to voters, backed by histrionic TV appearances designed to enhance name recognition. The role of reason and informed deliberation in Japanese politics is diminishing at an alarming rate.

Of course, this trend toward the political equivalent of fast food, with its emphasis on mass appeal and instant gratification, is a problem facing all the world's mature democracies. But the problem seems to be magnified in Japan, which has never experienced a popular democratic revolution. Here politics has traditionally been left to politicians, and the level of involvement by ordinary citizens has always been low. In short, most Japanese people do not regard politics as a matter of personal responsibility. Perhaps because of this attitude, Japan is in danger of becoming a global poster child for the problems and limitations of democratic government in a world of round-the-clock infotainment.

    • Senior Associate, Tokyo Foundation / Professor, Toyo University
    • Katsuyuki Yakushiji
    • Katsuyuki Yakushiji

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