DPJ—DNP-CD on the Economic Crisis?

I am not competent to pass judgment on the Aso administration and the LDP-New Komeito coalition’s initiative to put forth another stimulus package most likely before the Golden Week holidays. Having said that, I do prefer maintaining consumption by putting cash directly into the pockets of people who are affected by the downturn and otherwise reinforcing the safety net while giving as much leeway as possible for the national economy to adapt to what is likely to be a significant adjustment to global consumption patterns. Thus, it is not reassuring to see reports of an LDP wish list filled with roads and high-speed railways whose prospects for raising long-term productivity are in doubt in the first place.

Contrast that, though, with the DPJ, which has been mostly missing in action as the economic crisis deepens. They seem to be stuck with its 2007 Election Manifesto upgrade. There’s a case to be made that that is all we need and that we should just wait out the storm, but it’s not really doing that either. This is odd for a party full of policy wonks, as well as economists more than willing to lend them a hand to help give Prime Minister Aso the send-off that they feel he deserves. (I suspect, though I have no personal knowledge, that some members of the bureaucracy—no monolith—would be willing to work on the side with the opposition in this respect.) However, many of the policy-oriented crowd are the very people that Ozawa has sidelined from the party leadership.

The Nishimatsu scandal has further pushed it in that direction, but it’s not as if this began yesterday. Ichiro Ozawa’s supporters hold him up as a man of ideas, or, more appropriately, ideals, but even they do not accuse him of being overly interested in the actual policies nor of having a grasp of economics and finance beyond what he needs to maintain his political machine. The distraction has merely added to his disinterest, and this all shows. This is a game in which this coach is not ready to play his players.

Industrial production, and with it the economy as a whole, is likely to stabilize in April, and possibly even show a modest rebound, all of which the administration/coalition will claim as an “announcement effect”. Of course that still means that we will be looking at a 5-6% fall in this year’s GDP. But without a meaningful response of its own, the DPJ will be tagged as mere naysayers—if not part of the problem, then certainly not part of the problemsolution. And as of now, it is not equipped to engage in the policy debate.