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Thursday, Nov. 15, 2012

Japan's sun is setting quickly

Special to The Japan Times

HONG KONG — It's hard these days to be optimistic about Japan's economy or have much faith in Japan as the Rising Sun, a global economic power, Asia's industrial and technological powerhouse, or about any other laudatory epithets, as the country's political, bureaucratic and economic leaders determinedly squabble in a headlong rush to take the country from economic superpower to over-indebted Third World country.

The faltering economy crippled with government debts of 240 percent of GDP, twice those of Greece, and an overvalued yen driving companies offshore and hollowing out industry is bad enough. Tensions with China, Japan's biggest trading and investment partner, have merely added a damaging downward twist to the economic spiral.

But worst of all is what can only be called mindless political shenanigans. Leaders are playing children's games to try to gain power. The way they are doing it is taking the political debate dangerously far away from reality. This is a tragedy for Japan, but it is also a danger for Asia and for the world.

Recent events demonstrate the close links between tragedy and farce. Independent audit bodies discovered that 25 percent of $240 billion in funds supposed to help put the earthquake and tsunami devastated region of northeast Japan back on its feet have been diverted.

Beneficiaries include road building in Okinawa (1,600 km from the disaster zone), a promotion campaign for Japan's tallest building, subsidies for a contact lens factory, protection for Japan's controversial whaling fleet and help for selling nuclear technology to Vietnam. About half of the reconstruction money remains unspent because of arguments about how to rebuild the area. Eighteen months after the disaster, almost 300,000 people are still displaced and don't know when they will be able to return home, if ever.

Japan's politicians today are indulging in wild mating dances before the next Lower House parliamentary election due by August. Shintaro Ishihara gave up his powerful job as governor of the Tokyo metropolis to take his aggressive nationalism into mainstream politics and become leader of the Sunrise Party.

Ishihara's move is bad news for relations with China, given his provocative plan as governor to buy the disputed Senkaku islands for Tokyo. He has long demanded that Japan must stand up for itself, and vigorously claimed that the Rape of Nanking when Japanese imperial troops went on a widespread massacre of the Chinese city in 1937, was a fiction invented by the Chinese. The Chinese remember these slights. What should be worrying is that Ishihara has no sense of discretion, but seems determined to rub his controversial views in the face of opponents who are best not antagonized.

His is only one of many moves in the changing kaleidoscope of Japanese politics, with alliances and new parties forming and reforming, choosing populist names such as Sunrise Party (deliberately chosen to suggest rising sun), Your Party, People's Life First, and Osaka Mayor Toru Hashimoto's Nippon Ishin no Kai (Japan Restoration Party with echoes of the Meiji Restoration).

Some political commentators claim that the constant changing of alliances is merely part of the expression of Japanese democracy and the quest for a third force to challenge the Tweedledum and Tweedledee of the two established parties, Prime Minister Yoshihiko Noda's Democratic Party of Japan and the longtime ruling Liberal Democratic Party. (Aficionados of Lewis Carroll's "Alice" books will remember that Tweedledum and Tweedledee were identical twins fighting over a child's rattle.)

What should be worrying is that most of the moves are based on personality, not principle, and driven by hunger for the spoils of power. There has also been a loss of civility, which saw the prime minister barred by the opposition-controlled Upper House from making his policy address there. Noda is on a slippery slope, and lost two more Diet members, who jumped his leaky ship, leaving him with a majority of just six in the Lower House.

The LDP now fancies its chances at regaining power, though all the opinion polls suggest that it would need allies; hence the mating dances. In power, the LDP with allies like Ishihara and perhaps Hashimoto, would seek to make Japan great again, starting with changing the constitution to get rid of Article 9, which renounces war, turn Japan into a "proper" nation with its own armed forces, not mere Self-Defense Forces (even though these are the world's sixth biggest military force backed by $60 billion in annual spending).

Such moves might make politicians feel good, especially to assert Japan's nationhood and perhaps wave a stick at China. But they would be precisely the wrong moves. The continuing collision course between China and Japan over the disputed islands is the last thing that either country needs. Even an armed skirmish would be a disaster and at best a Pyrrhic victory, for both sides, however it ended.

Japan needs better diplomatic, economic and trade relations with its neighbors and the world if it is to sort out its main problems of a sluggish economy set in an increasingly arthritic and aging society. It is wishful thinking to believe there is a magic wand to solve the problems.

Recent wretched results and profit forecasts of Japan's electronics giants — with flagship companies like Panasonic and Sony reporting massive losses and Sharp warning that its very existence is in doubt — show that Japan is losing to nimbler South Korean, Taiwanese and other rivals.

In addition, Japan has faced a string of business scandals, including at Olympus — surely not forgotten in the spate of other problems — and Daio Paper, not to speak of the continuing issues involving collusion between Tokyo Electric Power Co., Japan's nuclear establishment and the bureaucracy. All these issues suggest that it is the economy that most urgently needs attention, and perilous for the country for politicians to be playing their power games.

It would be good if Japan's electorate would send a clear message that anyone without a detailed economic plan will not be chosen. Sadly, the so-called democratic system does not allow such a message easily to be sent. Putting up the consumption tax to 8 and then 10 percent does not constitute a detailed economic plan, incidentally — not without explaining how growth is to be boosted to allow the tax revenue to rise. Without growth, there is a real risk that a higher tax will produce less revenue, and then Japan would be really be heading to skid row.

Japan's situation is not hopeless. Its people are well-educated and have responded to challenges before now. The technology base is good. There is scope for change, but it means widespread economic reform and deregulation, which vested interests will fight tooth and nail.

Just to give one example of the challenges, Japan would get a boost if it encouraged more women into the workforce, but a society dominated by old men cannot contemplate this.

"I would love to have a proper career," says Terumi Irie, a bright 40-year-old who gets up at 5 a.m. every day to wash clothes and prepare breakfast and lunch boxes for her husband and two teenagers before going to her own part-time sales job. "But the men run things and expect you to stay in the office until nine or 10 at night."

Kevin Rafferty is a veteran journalist based in Hong Kong.

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