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Saturday, April 14, 2012

Osaka and Scotland: local leaders and decentralization

Special to The Japan Times

Two of the most dynamic and successful politicians in the past year in Japan and the United Kingdom have emerged far from their respective capitals. Both are leading local parties, riding a wave of popular disaffection with national parties. And both — Toru Hashimoto in Osaka and Alex Salmond in Scotland — are seeking drastic decentralization, turning the politics of their respective countries upside down. If they get their way, it would spell the end to the national parties' long-standing monopoly on power in both countries. So far they look well poised to succeed.

Osaka Mayor Toru Hashimoto, a 42-year-old lawyer and former celebrity, is sending shock waves daily through Japan's political stage. Hashimoto initially came to power with promises to merge the administrative districts of Osaka city and prefecture to create a greater Osaka region, which has a population and economy comparable to Sweden in size. The reforms were designed to end wasteful overlap, free the city from the shackles of central government regulation and create a competitive world-class city in the same league as Hong Kong and Singapore.

To pass these reforms, Hashimoto has been calling for the cooperation of national parties and parliamentarians in Tokyo. Receiving little help, the Osaka mayor has threatened to unleash his local party onto the next national-level elections. He is already planning his march on the capital, having attracted hundreds of potential candidates to his party. In preparation, Hashimoto has announced an ambitious electoral manifesto seeking to dismantle Japan's centralized structure, which has been in place since the Meiji Restoration in 1868.

Alex Salmond, leader of the Scottish National Party (SNP), has been judged "best politician of the year" by various U.K. media. In elections last May, the SNP swept to an absolute majority in Holyrood — Scotland's devolved parliament — devastating the Scottish branches of the three British mainstream parties. Running circles around London, Salmond secured a chance to hold a referendum on Scottish independence in 2014 that may bring about the end of the 300-year-old union between Scotland and England.

Salmond says that independence is not the top priority for the SNP or its voters. Indeed, polls suggest that only about a third of the Scottish public is ready for independence. The SNP came to power not only or even primarily because of its stance on independence, but rather for being seen as the more competent party to govern Scotland.

Disgruntled with Labour's excessively promarket policies — especially toward the City [of London], England's Wall Street — and its illegal war in Iraq, traditional Scottish Labour voters have defected to the local party. More than 70 percent for Scottish voters were satisfied by Salmond's performance in MORI polls conducted in December. In contrast, over 60 percent of voters were unsatisfied by the performance of the Conservative Cabinet in London.

Likewise, Hashimoto is fueled by the disaffection with incumbent parties in Tokyo. Polls taken in March reveal that 60 to 70 percent of the voting public supports Hashimoto's plans to advance into national politics. Meanwhile support rates for the ruling Democratic Party of Japan and the opposition Liberal Democratic Party trails in the low teens, with over half of the public disapproving of the Noda Cabinet. Hopes are high that the local leader, untainted by Tokyo parties and politics, will be able to dismantle the old structure. Tellingly, one commentator said Japan needs "47 Hashimotos" — one for each of its prefectures.

In a proto-manifesto for the upcoming Lower House elections, Hashimoto and his advisors have outlined an ambitious program to re-engineer Japan's political economy. Measures include decentralizing power, establishing autonomous regional governments, abolishing the Upper House, revamping the pension system and making it easier to revise the Constitution. The ambitions are lofty, almost revolutionary. Borrowing the name of a set of radical reforms — Senchu Hassaku — that led to the creation of the Meiji Constitution in 1890, Hashimoto promises a "grand reset" of the country. His plan for Japan is to strip away the dead weight of central government and its bureaucracy to encourage virtuous competition among regions.

Decentralization has been a long running theme in the politics of structural reform in both the U.K. and Japan, and indeed among most democratic countries in the past two decades. For proponents of small and efficient government, devolving power promises to slash an overgrown central government. For proponents of economic growth, devolving power triggers virtuous cycles of competition between regions. For proponents of improved democracy, devolution promises government that is closer — and hence more accountable and participatory — to local communities. For regions with unique ethnical, linguistic or historical identities such as Scotland, Quebec and the Basque region, devolution (one step from independence) allows greater self-determination.

Though often seen as a panacea, there are many serious caveats to decentralization. These include risks of greater local corruption and fiscal indiscipline, as well as a "race to the bottom" in social services and regulatory standards among competing local governments.

In Japan, the mantra of decentralization has been a rallying cry for reformists from across the political spectrum in the past two decades. At the heart of this chorus is a call for dismantling centralized government controls and centralized pork-barrel spending, which are seen as suffocating the country's regional economies. Although recent governments have halfheartedly pushed for reform, Japan's regions continue to lack independent fiscal resources and remain constrained by a fine web of central government ministry regulations.

More worrying, the past decade of halfhearted decentralization reforms have slashed subsidies and increased responsibilities, leaving Japan's regions even more destitute than ever. Salaries, real estate prices and populations have fallen while local government debt, social security costs and the proportion of elderly residents have mounted faster in most prefectures outside of the capital.

The Tokyo area continues to drain vitality from outlying regions. More than a quarter of all Japanese live in Tokyo and its three surrounding prefectures, yet its population continues to increase even as Japan's overall population is shrinking and as many as 800 of its municipalities are suffering from long-term depopulation. The sprawling metropolitan area is home to the headquarters of nearly half of Japan's listed companies, 80 percent of its media industry and 40 percent of all its universities. With political, economic, media and educational resources concentrated in just 0.5 percent of the country's total landmass, this is surely a case of Japan putting all its eggs in one basket. With seismologists predicting a devastating earthquake could hit Tokyo at any time, such over-centralization looks unwise.

Despite calling decentralization its top priority, the DPJ has been able to deliver little. In the past year, critics have argued that the post-quake reconstruction of the Tohoku region would be a prime opportunity to devolve decision-making powers to local communities. Instead, central government ministries continue to steer budgets and oversee reconstruction plans in the disaster-stricken regions. Symbolically, a Tohoku reconstruction agency, which decentralization promoters argued should be located in the region, was placed in Tokyo, highlighting the DPJ's lack of commitment toward dismantling central ministry control over regions.

Frustration toward the endless failure of mainstream parties to deliver has encouraged the emergence of new local leaders across the country challenging the center. Besides Hashimoto in Osaka, a successful new party has been launched in Nagoya and Aichi, home to Japan's automotive industry, by a former DPJ parliamentarian turned mayor. Smaller regional parties across Japan are emerging, some of them modeling themselves after Hashimoto's "Restoration Association."

Such a surge of local party development is new in a country where local politics has long been dominated by the national parties. In Tokyo, the feisty octogenarian governor, Ishihara Shintaro, has spoken of launching his own party and joining forces with Hashimoto in an attack at the national level.

The creation of a regional government system — doshusei — is at the heart of proposals being made by these new parties. Japan's prefectures would be abolished, a dozen or so regions would be created and powers and functions would be devolved to them. Central government ministries would be dismantled aside from those pertaining to core national functions. Local governments would be given the freedom to experiment and compete.

The proposal for doshusei is not without its detractors and opponents. Central ministries that fear losing their discretionary powers, privileges and even jobs are the surest opponents. The regions themselves are not united on this matter either: The Governor's Association remains strongly divided over doshusei plans as some of the weaker and poorer prefectures fear they will lose out against the wealthier metropolises of Tokyo, Osaka, Nagoya and Fukuoka as they did in the last round of decentralization.

Voters themselves, who may have sentimental attachment to the names of their prefectures, may oppose the measure. Parliamentarians as well are likely to be cautious about fiscal decentralization, not least because it would end their role in channeling government pork from Tokyo to their regions.

In Scotland there remain questions over how viable it is for the Scots to go it alone especially as the future of the euro and European Union, and whether an independent Scotland could or should join these entities on the eve of independence, remain uncertain. It is also not clear whether Scotland would benefit fiscally from such a move. Both sides of the argument provide contradicting evidence on whether an independent Scotland could increase revenues from its North Sea oil fields.

Hedging on this hesitation, there has been talk of putting a second question on the independence referendum in 2014. This would ask Scottish voters whether they would like to demand full decentralization of all powers from London, just short of independence. This "devo max" option would make the Scottish Parliament responsible for all laws, taxes and duties in Scotland. Defense and foreign affairs, financial regulation, monetary policy and the currency would be dealt with by Westminster.

Whatever shape the referendum takes, it appears that Salmond's vision of a future belonging to "small, nimble and fleet-footed nations with big ambitions" will continue to have strong appeal for voters frustrated by the lumbering politics of London. Many of Japan's regions, including Osaka, have economies and populations larger than Scotland. Though they may not wish for independence, it is clear that they will agree with the Scotsman that there is little future in being weighed down by an inept and untrusted national government.

Ken Hijino is an associate professor at Keio University Graduate School of System Design and Management. Formerly a journalist in Tokyo, he completed his Ph.D. at the University of Cambridge in 2009, researching decentralization and local politics.

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