August 31, 2009

Quick Musings on Japan Election Results

Someone asked me for my take on the results of the recent national election in Japan in which the opposition DPJ was victorious over the long-standing rule of the LDP. I haven't lived in Japan for some ten years and had not been following the election very closely, but here goes:

While in a sense the results are dramatic, I wonder how much change there will really be.

Many of the head honchos of the victorious DPJ are former LDP members who jumped ship over the years, hoping to get a shot at leadership. Many of the elite in both parties come from long political and even former aristocratic lineages.

Plus with the Japanese penchant for consensus and compromise, it's really hard to implement radical change. You also have the entrenched bureaucracy run by another fiercely traditional oligarchy from a very small coterie of elite universities and old boy's networks, and they're not going to be easy to move either.

Perhaps the DPJ victory is psychologically dramatic, but whether or not the party will be able to accomplish much is questionable. From what little I've read of their platform, it sounds like they plan to continue the long tradition of economic stimulus that hasn't worked much for the last couple of decades. While the LDP is viewed as being toward the right, and the DPJ moderately toward the left, I think in essence they're both of the "let's spend our way out of trouble" bent, and at this point that's like pushing on a string.

Some of the issues the J govt faces are intractable -- the rapidly aging population, massive underfunding of the government pension system, etc. I don't think there's much wiggle room for any party.

I think one of the main things that's kept Japan afloat is the massive cumulative personal savings squirreled away, for most part, in low-interest Japan Post accounts. Cheap money for the govt!

On our last trip to Japan about two years ago I was blown away by all the massive commercial/office tower developments recently completed or underway all over Tokyo. You'd never think the economy had been in a terrible slowdown for decades, or that the population had actually begun to shrink! I wonder who the heck is going to occupy all that space. Is it all really economically justifiable, or is much of it stimulus and cheap money gone mad? I suppose much of this Class 1 office space is being taken by firms upgrading from older buildings, but still.... I have this uneasy vision of huge, empty towers dominating a Tokyo with a shrinking population like some dystopic manga movie.... The lights are burning, but is anyone home?

But then again perhaps those towers have all been filled in the two years since our last visit and are happily humming away with life. I haven't read any Tokyo real-estate articles in ages.

Posted by Paul at August 31, 2009 12:26 PM