Memo on the Consumption Tax

Nothing says Happy New Year like talk of a (consumption) tax hike. Noda got the DPJ to go along by pushing the initial raise to 8% back six months from the original proposal to April 2014, and what’s a few months this way or that, no? Ozawa’s Plan A must be to get acquitted in time to mount a challenge in the DPR leadership election next September against a weakened Noda. Must get busy now; in the meantime, the following is a memo that I wrote a little over a week ago around the issue. I hope that you find it relevant. Finally, I wish you all nothing but happiness and joy in the year to come and thereafter.

---

1. A majority of the Japanese public believes that a consumption tax hike is inevitable. The 1988 introduction of the consumption tax was highly unpopular with the Japanese public.
2. Big business generally supports a consumption tax hike. There is no overt opposition from SMEs, who, like big business, a) do not like the government's idea of shifting the growing burden of the social safety net on the shoulders of businesses (pushing 20-30 hour workweek employees into the Kosei Nenkin hurts big and small business alike) and b) would like to see the corporate tax instead. The 1988 introduction of the consumption tax was fiercely opposed by SMEs and many other businesses
3. The MSM generally supports a consumption tax hike. The MSM was split in 1988.
4. The LDP has supported a consumption tax hike. The opposition parties were strongly opposed in 1988.
5. Public disgust over the Recruit scandal that contaminated virtually the entire LDP leadership likely had some effect on the1990 election results. Besides, the 1986 election results were exceptional, making the 1990 results look worse that it is in a historical context. The 3% to 5% hike did not keep Hashimoto and the LDP from winning in the 1996 election, already well into the post-bubble decade.

So what's the problem?
1. Public mistrust of the conventional political class. The lack of political leadership and policy consistency has sapped the credibility of both major parties in asking the public to pony up. (That is why the largely symbolic (in fiscal terms) value of a notional downsized Diet is taking on significance.) The DPJ has had a longer distance to fall, which they did because only a small fraction of the promised savings materialized in its first three years in power. (There were of course Hatoyama's Futenma debacle and incoherence and Kan's inability to articulate and execute. Noda has so far proved (sic) pedestrian, though his persistence should prove useful in getting a compromise on the consumption tax.)
2. Poor economy. The argument is that this is not the time to put the brakes on consumption. That's a reasonable argument, although a trigger for 2013, BTW the more likely arrangement, should take care of it. (Economists and analysts argue over the effect on consumption and savings. I'm not competent to go into that; suffice to say that opponents bring up this argument and many of them no doubt believe it.)
3. The battle for the periphery. The DPJ won the (upper house) 2007 and 2009 elections in part by capturing seats in the periphery, many in districts in traditional LDP strongholds--with low-income, elderly demographics, who will feel relatively more pain from the tax hike. (To be fair, the DPJ also win in the metropolitan districts.) The LDP wants those voters back in their fold, while DPJ parliamentarians with insecure seats (presumably skewed heavily toward Ozawa allies and dependents) will be tempted to vote for their constituents' purses.

2012 should be a good year for the economy, while economists largely agree that it will be less so in 2013. Arguably, it's now or never for the Noda administration. But it can't do anything about the mistrust. But neither can the LDP. Public perception that the LDP is opposing a tax hike--and that's only if they actually manage to cohere around a clear position in opposition--for purely tactical reasons will cause significant damage to the LDP as well. One possibility lies in ganging up on the smaller parties and place the bulk of the consequences of downsizing on the proportional seats, make a compromise on a trigger-equipped consumption tax bill, then let Diet members vote their conscience. There is a huge upside/downside risk here, though. The likelihood of lopsided results become much higher with a smaller proportional-seat cushion. And voting their conscience may only delay the onset of thoroughgoing realignment. Also militating against the compromise that I suggest would be the LDP-Komeito campaign alliance, which the LDP would be loath to give up.

Those are my thoughts as of now. I know there is no convincingly overriding scenario here; all I'm sure of is that the LDP can't let Noda have his consumption tax and declare victory, nor can Noda drop the consumption tax hike and go on as if the whole series of events had never happened.

My Thoughts around the Nine Defectors and Beyond

It was more like minutes than hours, wasn’t it? So what kind of people bolted the DPJ today over the prospective consumption tax hike to form a new party? Mainly proportional-only candidates, most of whose prospects of reelection in anything but a landslide by the DPJ are nil, that’s who*. For these people, their best chances would lie in running as bi-candidates in a new party and hope that the new party wins enough votes (and they lose by small enough margins) to allow them to make it back as zombies.

Beyond that, my guesstimate says that the DPJ could win 180 out of the 304 first-past-the-post districts—the DPJ won 227 in 2009—and the DPJ’s 45 proportional-only incumbents would still be in danger of being wiped out**. It’s not a good time to be a DPJ Diet member who doesn’t have a single-seat district to hedge his/her bet and be eligible to compete with all the other bi-candidates for zombie status. But running in a single-seat district will cost you, so it’s not a viable option unless you’re deep-pocketed or willing to bet the farm.

There was another DPJ defector today, but that’s more the subject of comedy. I might go back to it tomorrow.

* Akira Uchiyama(3rd term) South Kanto ranked 1st, among DPJ proportionals; lost Chiba 7th; Ozawa group
Koichiro Wtanabe (2nd) Tokyo 29th among DPJ proportionals, of whom 23rd-29th got in; Ozawa; habitual loser
Juntaro Toyoda (2nd) Kinki 51st, 45th-52nd; Ozawa; repeat loser (one win in 1993)
Mitsuji Ishida (1st) South Kanto 37th, 37-39th; Ozawa; one-time prefectural assembly election loser
Masae Kobayashi (1st) Tokai 39th; 34th-41st; Ozawa; mayoral election loser
Yoshinori Saito (1st) (斎藤恭紀〈１〉（宮城２区）鳩山
Atsushi Chugo (1st) South Kanto 1st , lost Chiba 12th; Ozawa; two-time municipal assembly winner
Nobuki Miwa (1st) Tokai 38th, 34th-41st; Ozawa; four-time prefectural assembly winner
Yoshihiko Watanabe (1st) Kinki 48th, 45th-52nd; Ozawa; two-time loser, hid bankruptcy procedures to remain on DPJ list
** There are ways to develop more detailed estimates, but I’m not sure it’s worth my time unless I’m getting paid for it.

Who Will Jump the DPJ Ship over a Consumption Tax Hike?

For now, only a couple of handfuls, if the Asahi is to be believed. We’ll know in a matter of hours, if not days, but in the meantime, here are a few thoughts around the report that may be useful beyond the immediate future.

---

So far, prospective defectors are small in number and are mainly (but not exclusively) first-term Ozawa children (Miwa is a ripe old 69) in the lower house representing the urban expanse between the true outback and the Tokyo/Nagoya/Osaka metropolitan. No upper house names have emerged.

How will they fare in a snap election? Intuitively, not so good. They will have to share the anti-consumption tax hike vote with Your Party, who will also be able to 1) run candidates in more districts, which will help it gather proportional votes, and 2) position itself as the reformist alternative. There are many other factors to be considered, some positive (Yasunori Saito, who has local celebrity status, will rake in votes outside his district; people like Nobuaki Miwa, who have independent political capital, maybe able to wrest away a larger part of the local DPJ chapter than otherwise possible), some negative (political novice rookies may not be able to take much of the local DPJ party machine away with him). All things considered, expect a few other multi-term Diet members as well a rookie or two that have strong local assembly backgrounds to make the leap, calculating that, at worst, they can slip back in on the proportional tickets. Conversely, pure political rookies will not jump ship unless Ozawa jumps with them.

From My Email: Pop Culture, and a Discovery about AKB 48 (What Else?)

A couple of people and I got to talking about W. David Marx and Cool Japan, which got me to thinking about Japanese pop culture. The following is the relevant part of an email, uncensored, with one word corrected, one punctuation mark removed, font changed, and, oh yes, a hyperlink added. Otherwise, RAW. I think that I’ve picked up on something that no one, anywhere, has noticed.

Also, I’m seriously thinking about posting something mean-spirited about Ronald Dore. What do you think?

---

The best way to kill off One Piece (which I never liked BTW) would be to have the MEXT political team do a public announcement endorsing it. (On the other hand, PM Noda is a dead ringer for Komawari-kun, if they ever get around to doing a live-action version...)

Speaking of popular culture, look at the following list of AKB 48 members who have finished in the top 10 in voting, with their top finishes.

O Ohshima Yuko 大島優子 1
O Maeda Atsuko 前田敦子 1
O Shinoda Mariko 篠田麻里子 3
O Itano Tomomi 板野友美 4
C Watanabe Mayu 渡辺麻夕 4
C Takahashi Minami 高橋みなみ 5
C Kojima Haruna 小嶋陽菜 6
C Satoh Amina 佐藤亜美菜 8
VO Miyazawa Sae 宮澤佐江 9
O Kasai Tomomi 河西智美 10

"O" as in old-fashioned, "C" as in contemporary, "VO" as in...very old. Old-fashioned means that they would have been the kind of names that were predominant as I was growing up. Let me also note that "Tomomi" is gender-free (岩倉具視, haha）, although most three-syllable "-mi" names are more likely to be conferred on females. Contemporary means the kind of names that girls in their teens and twenties typically have. Very old means Meiji-, Taisho-old. As further proof of how name preferences have changed, there is only one other "-ko" in the whole bunch. (To be fair, her top finish so far has been 38. Next AKB member to bare all?) In fact, beyond these nine most popular members, contemporary names predominate the list. Is this all just coincidence? I think not.

Finally, as an example of: Japan Cool (not Cool Japan) influence .

Personally, I miss the old version . I must be growing old.

Have a nice weekend.

Message Management Missing in Noda’s Honolulu Trade Initiative

I’d been telling everyone who would listen that Noda would take Japan into the Trans Pacific Partnership (TPP) FTA negotiations if only because there was no way that he could back down without becoming the third lame-duck prime minister in the first three years of the Democratic Party of Japan’s hold on power. He made me a little nervous with his one-day delay of the announcement, but he did came through and the threat of secession from DPJ dissidents proved to be a bluff…for now. The TPP negotiations should take another year or more, which means that Noda does not have any related legislative action to worry about during the 2012 regular Diet session. However, the opposition will have a couple of matters with which it will test the prime minister to see if they can erode public trust in his governance. And his DPJ opponents will not be happy about them either.

First, he reportedly gave favorable notice regarding Japanese import restrictions on U.S. beef. Actually I’ve been bewildered by recent talk regarding the Noda administration’s willingness to revisit this issue, specifically to raise the import eligibility of U.C. cattle from 20 months old to 30. Leaving aside my personal views on the issue itself, it seemed odd to me that the Noda administration would make a valuable concession even before the TPP negotiations had started. I can think of no other explanation than that it was an “omiyage,” a present, to make the Noda-Obama go smoothly. Maybe it helped, maybe it didn’t, who knows. I’ve always believed that this tactic, long favored by the Japanese authorities, is demeaning and serves mainly to keep the Japanese political masters happy—whee, I got a lot of applause when I addressed the plenary!, President So-and-So shook my hand! that kind of thing—but that’s beside the point. The problem here is that the Noda administration has so far given no official indication that the beef issue is in play. In fact, the news that Noda notified Obama took the Japanese media by surprise. There’s a good political, if unscientific, reason that Japan is one of the few countries to maintain a 30-month age limit on properly processed U.S. beef. The Japanese public was scared out of its wits by the mad cow disease breakout and the Ministry of Agriculture, Forestry and Fisheries had to go well beyond what the science around the issue required. (In our defense, we are no more (or less) irrational than our American/British/Chinese/…Luxembourgian/…/South Korean/…/Zimbabwean friends. It’s just that we each care insanely about different things. Okay, maybe Luxembourgers don’t, though who knows…) This will cause problems. After all, this is a food safety issue. It has obvious international ramifications, but first and foremost, it’s a matter of domestic regulation. I think that Noda got it ass backwards, and the media, the opposition and his DPJ opponents are going to (rightfully in my opinion) take him to task for it.

Second, the White House announced that President Obama “welcomed Prime Minister Noda's statement that he would put all goods, as well as services, on the negotiating table for trade liberalization.” Now this may seem to you mere recognition of reality. After all, if Noda had said that agriculture, or anything else for that matter, was off the table, his bid to take Japan into the TPP negotiations would have collapsed on the dry dock. However, lobbies and Congress feed off trade issues, so the White House in its press secretary readout obviously did what it could to ensure smooth sailings as far as officially accepting Japan as a TPP negotiating member with as few domestic strings as possible. (A negotiator always looks to expand his/her mandate.) The Japanese side, incredibly, not only failed to anticipate the White House spin but did not put out any statement regarding the bilateral meeting except a bland, all-points-covered summary from the Ministry of Foreign Affairs (MOFA). The prime minister’s team—Kantei?—missing in action. (See if you can find anything at the Kantei website.) It wound up issuing a denial that Noda had said any such thing. Bad for relations with the White House, and fodder for opposition guns when the Diet resumes operations on the Prime Minister’s return from Honolulu.

Rumble at the Yomiuri Giants and Most (But Definitely Not All) of the Media Goes Bananas

…It’s about time, so why not reboot here…

---

You know that anyone who's looking for proof of Japanese media bias need only look at the Yomiuri sports pages and how they basically serve as the baseball powerhouse Yomiuri Giants’ fanzine. (Actually, I welcome media bias because it takes less time to go through them when you more or less know where they are coming from. They also give you media-driven baselines from which to make guesses at how public opinion will be trending, particularly on those rare moments—say, Kim Jong Il's admissions regarding the abductees—when Yomiuri and Asahi angles converge.) Well today, there was an incredible diatribe released by the representative/GM of the Yomiuri Giants (a former Yomiuri reporter proving that not all amakudari’s are necessarily handpuppets), who, if his lengthy statement (full text starts here is to be believed, apparently refused a bribe from powermonger and all-around meddler Tsuneo Watanabe in the form of more power and a promise of eventual elevation to CEO in exchange for going along with Watanabe's lies—not the rep/GMs words, but there’s no other way to put it—around his attempt to overturn Giants personnel decisions to which he had already given consent.

The late afternoon-early evening news broadcasts all appear to be featuring the story prominently—all, that is, except Nippon TV. I’ll give you one guess which media group owns Nippon TV.

But what am I doing watching TV when the rest of the Japanese world is working? Actually, this is relevant to my line of work, as it should spell the end of Watanabe's role as political fixer—anything fixer, really. If Ichiro Ozawa had held any hope that Watanabe could reprise anything like his 2007 role as go-between for an aborted deal between Ozawa and then Prime Minister Yasuo Fukuda for a Grand Coalition, it’s gone now. This diminishes the LDP's old guard as well, since Ozawa was their most familiar and likeminded interlocutor. An era is passing, and this incident is part of it.

Let’s see what if literally anything tomorrow’s Yomiuri has to say about this.

Are Japan’s Days of Overseas Adventures Over?

The following is my email response to an inquiry from a friend in the academia, verbatim but with personal details edited out.

---

[F]:

Foreign relations in the abstract are of little concern to most voters. Instead, they respond to specific issues such as the North Korean abductions or a mad cow disease breakout in a beef exporting country. Politicians as well as the MSM are inclined to think differently, since statecraft is a far more amusing endeavor than making sure that the private sector keeps the trains running on time, i.e. leaving them alone as much as possible. Still, in a democracy, it is a luxury to be indulged in at one’s peril unless one has dotted and crossed all the more significant I’s and T’s at home. Specifically in Japan’s case, it does not have geopolitical interests that diverge significantly from those of the United States (and to a lesser extent the EU). This means that Japan can largely free-ride on global public goods (and to a lesser extent regional public goods) that the United provides for the rest of the world (including China, though the Chinese authorities would be loathe to admit it).

Much attention was given in the mid-90 and early 2000s to the LDP regime’s interest in permanent UNSC membership and a larger international profile for the Japanese military, propelled in the latter case by the perception of humiliation on the occasion of the Gulf War. However, the first floundered because of the lack of support from non-permanent members that were not part of the push for inclusion in the Council and ill-concealed antipathy from China; the second was always destined to be limited because of fiscal constraints. Meanwhile, on the economic front, the Doha Round is now in its death throes while post-Kyoto Protocol climate change talks are going nowhere fast, leaving little room—or need—for Japanese authorities to spend whatever political capital it has on the issues. The triple disaster has certainly forced the Kan administration to take its eyes off the rest of the world, but, as you say, it only accelerated, albeit dramatically, a trend that had already been in the making.

What will happen when the Japanese economy recovers from the disasters? First of all, the fiscal circumstances will continue to demand the attention of the Japanese government and its constituencies. That means that there will be little political room for expensive overseas adventures excepting FTAs and other economically advantageous undertakings. (Prime Minister Kan gave lip service to foreign ambassadors in Tokyo by promising that the 100 billion yen cut that Japanese ODA took to finance the relief and recovery efforts would be restored many times over. But that’s a canard, really, since the cuts will last only a couple of years—fingers crossed—while Japanese ODA will last many decades beyond that, if significant numbers of developing countries remain just that: developing.) And that leads to my second point: Japan needs socioeconomic reform. This will demand most of the Japanese government’s attention, as well as the expenditure of considerable political capital for more sweeping FTAs with Japan’s major trading partners. Any efforts outside of support for socioeconomic reform will be largely reactive, responding to events and circumstances as they unfold. (A violent endgame on the Korean Peninsula would be a good example.) Third and finally, Japan will emerge out of the disasters’ aftermath older and, in relative terms, economically diminished if BRICS and other developing countries maintain their most recent historical growth trends. This will diminish further the Japanese government’s ability to act proactively on the regional and global theater and the willingness of the Japanese public to support any such adventures.

There is anecdotal evidence to suggest that the younger post-online generation has a different outlook on the rest of the world, domestic and overseas, than their elders. The drift away from hardcopy print media to the less judgmental visual media and the vastly more fragmented online sources of information and public (for want of a better word) discourse could be a contributory cause. The consequences of a post-industrial society—the difficulties that the less skilled have in finding secure, well-paid jobs; complacency settling in with general affluence; aging demographics creating a societal background that discourages risk-taking across the board—could also be behind what I suspect is a more global phenomenon. 35 would be as good a point as any to find an Internet-driven divergence if there is one. But all this is speculation on my part and is not based on personal observation. The Japanese under 35 generally do not speak to me.

I hope that helps. And congratulations on your [book] contract. I understand that any academic career will be well-served by that hardcopy publication.

Jun

PS: The following are fragments of an earlier attempt at responding. They don’t quite fit into the main narrative, but I include them here since they might add more substance to my arguments there.

“The last point is true of all democratic nations (and, over the long run, in all others as well) but particularly so in Japan. I see two reasons for this. First, Japan is not one of the main protagonists in any regional issue that has existential consequences. This means that regional issues will only be in the forefront of voters’ minds in the case of an acute incident—which will be of electoral consequence only if it changes voters’ perception of the administration’s competence. Second, Japan’s interests regarding global issues are mostly consonant with the countries in that of the United States, ROK, and to a somewhat lesser extent with the EU. This creates massive incentives for any conventional administration to ride the US hegemony’s wake to the maximum possible, i.e. do the moistest with the leastest. You have heard of the Yoshida Doctrine?

“So unless there are specific issues that demand political attention—to give two examples, 1) DPRK developing nuclear weapons and firing ballistic missiles in our direction and 2) the US pushing us to do more to provide regional and/or global public goods—an administration is well advised to…”

Kruel Kan Going after TEPCO Pensioners? So Surprise Me

I’ve been getting a few inquiries on the government’s (so far) successful decision to essentially force TEPCO’s private-sector stakeholders—employees, shareholders, creditors, sister regional (de facto) monopolies, and yes, consumers—to foot the entire bill while remaining for the time being for practical purposes the guarantor of TEPCO’s solvency and viability. The following is my written response, unedited, to an email that refers to a Nikkei report that Prime Minister Kan is asking TEPCO pensioners to join the rest of the stakeholders lining up for haircuts. I relied solely on my memory to write it and I’m not a lawyer, so some of the facts being used may be a little off, but I’m pretty confident that the overall narrative is pretty sound. I’ll also add here, as I told one of the inquirers on the phone, that the SOB that (I think) he is, he puts policy ahead of politics, not the other way around as more conservative parts of the Japanese mainstream media suggests.

---

I’ll meet you half way. I agree that Kan is an SOB. Anecdotes in the media and on the grapevine suggest that he’s been that way all along. But “political” SOB? I’m not so sure, at least in this case. True, TEPCO pensioners are not legally responsible for the mess barring the individual TEPCO pensioner whose individual contributory negligence is proven. However, if the government does not step in beyond the 120 billion yen and keep TEPCO solvent, creditors (or TEPCO) would have no recourse but to enter into one of the bankruptcy procedures and take significant haircuts. The no-doubt very generous discretionary portion (上乗せ部分) of the corporate pension plan will be in jeopardy, as TEPCO payments into the pension fund will be slashed, affecting TEPCO pensioners present and future. So, if it’s not unreasonable to demand that if the government is going to step in to save TEPCO, all stakeholders—and that includes the sister regional monopolies if you think about it—must chip in with a portion of their potential losses in the event of bankruptcy, then it’s not unreasonable to demand that TEPCO pensioners pitch in too. If this story sounds familiar, it is. It’s the parable of the JAL pensioners.

So much for Kan’s jerkhood. Or is it? Are we carrying strict liability too far? After all, one of the concessions that the government made to convince Chubu Electric Power to stop its one currently operating nuclear unit was to agree that CEP had done nothing wrong and was shutting the unit down purely as a matter of government policy. Now TEPCO stakeholders must be wondering: What does CEP have that TEPCO doesn’t? One journalist reminded me, “The accident.” True. And the Nuclear Power Indemnification Act (NPIA) demands strict liability. But Chief Cabinet Secretary Edano has on at least one occasion stated that TEPCO and the government are jointly and separately liable (不真性連帯責任), and a couple days after that the responsibility was a 50-50 split. Legally, that means that TEPCO can sue the government to shoulder its prorated-for-responsibility part of the damages. Moreover, there’s a plausible case to be made—I won’t bother with my reasoning here—that Article 3, paragraph 1, of NPIA should be invoked, putting the entire damages squarely on the government’s shoulders and the government’s alone.

The government has been doing a pretty good job of bluffing TEPCO into submission, and the TEPCO board of directors would have to move to the Caymans or someplace else where right-wing megaphone vans and firebombs cannot reach their dwellings before they could make a stand. Still, there’s no reason to believe that overseas shareholders and creditors—say, some hedge fund in Connecticut that happened to have been holding a chunk of TEPCO shares before the tsunami inundated Fukushima 1 might have reason to bring a shareholders suit on behalf of TEPCO against the government—it would be an administrative lawsuit in the case of Article 3, paragraph 1 and a civil lawsuit in the case of recovery of prorated damages—or TEPCO board members for damages.

In fact, the alternative that I present here would be a very real one if this occurred in a different socio-political environment. (Say, Delaware?) So, barring the odd US hedge fund—and there’s probably a legal minimum proportional holding required to bring shareholder lawsuits; you can look it up—the saga is likely to unfold more or less according to the government’s storyline,although there will be political bumps along the road. But no one seems to have a better alternative, and no one appears willing to contemplate an formal bankruptcy whose ramifications for the immediate stakeholders and more broadly the Japanese economy itself are unknown. In the meantime, though, it is only fair in my view that TEPCO pensioners, like any other group of stakeholders, shoulder its proportional share of the full financial burden.

BTW it is useful to keep in mind that TEPCO is likely to be allowed to more or less pass on the 1 trillion yen/yr in extra fuel costs and the write-down for at least four nuclear power units, and all the regional monopolies should also be allowed to include their payments into the newly proposed sinking fund in calculating their tariffs. So we the electricity consumers will also be sharing the costs of the disaster.

My Take on the Asahi/Wikileaks, Mostly Focused on the Nuclear Disaster

Another stateside friend New York tossed this NYT report my way. The following is my response, lightly edited here with a sentence tacked on at the end.

---

The bits and pieces mostly jibe with what we've been seeing and hearing in the media since the DPJ took over. That's what's remarkable about the US wikileaks in general. It's like, tell me something we hadn't known or suspected. That said:

..."Compartmentalization and risk aversion within the bureaucracy, however, could increase Japan's vulnerability to threats for which it is less prepared,"

Bureaucratic decision making has been cited as a factor in Japan's lack of preparedness, almost exactly three years later, for the record-breaking tsunami that crippled the Fukushima Daiichi Nuclear Power Station and set off the worst nuclear disaster since Chernobyl. While the cable offers few specifics about the weaknesses in Japan's disaster planning, it does go on to warn that a blow that disables the country could have catastrophic consequences for global trade and finance.

Note that the first sentence appears to refer to the response to a threat for which it has not prepared for, while the subsequent paragraph appears to be referring to the lack of preparedness itself. These are two connected but logically distinct propositions. Confuse the two, and you get a narrative that is literally nonsense. A bureaucracy, of course, is by nature compartmentalized and risk-averse, so, left to its own resources, will always respond poorly to the unforeseen. Case in point: Hurricane Katrina. That is why leadership is so important. Case in point: Hurricane Katrina. And leadership is where the Japanese public is pinning the blame on. In my conversations on this subject, I've insisted that the typical response under the LDP regime to a nuclear disaster--any disaster--would have been to put the administrative deputy chief cabinet secretary in charge of crack bureaucrats assembled from the responsible ministries, team him up with a parliamentary DCCS, and have chief cabinet secretary preside over the entire process. The CCS could share the chores of public communications with the prime minister. Basically, put the people who know how the parts work, to minimize on-the-job learning. Instead, Kan approached the task as if a car broke down in the middle of the road, tried to repair it himself, then ignored the manual and started asking passers-by for advice.

That said, I suspect that most of the things that came to pass were driven by science and engineering and that most of the mistakes came in the public communications process. Note, though, that the human response to any nuclear disaster tends to be deeply irrational, unscientific, and apocalyptic. This means that the margin of error for managing the figurative—if not the physical—fallout is very small compared to other disasters, such as massive toxic chemical spills—or the tsunami itself.

More on My Take on TEPCO’s Post-Nuclear Disaster Liability

A friend of mine wrote in to tell me that according to a media report, plans are afoot for a 50/50 split between TEPCO and the government for liability stemming from the nuclear disaster under Article 16 of the Act on Compensation for Nuclear Damage. However, he’s looked at the TEPCO website and thinks that it’s still looking to be absolved altogether somewhere down the line under Article 3, paragraph 1 of the Act. The following is my response, lightly edited. I left a couple of embarrassing details visibly edits because I thought it was funny that I’d totally forgotten that I’d blogged it. At least I didn’t imagine it all in the still of the night.

---

It’s about time.

I made the argument early on—the SSJ Forum, where predictably no one picked up on it—that TEPCO directors could face shareholder lawsuits if they did not pursue the Article 3.1 route. And if I were a hedge fund holding TEPCO shares, I would be afraid of being sued by my investors if I didn't file that lawsuit against the TEPCO directors. Now, if I were a shareholder of that little old bank in Illinois that had put some of its money in that hedge fund... Remember how those little old banks would hold the entire deal in ransom during the 90s bailout negotiations?

As for the 50/50 split, it's been at least a couple of weeks since Chief Cabinet Secretary Edano said that the government and TEPCO were jointly and severally liable (I think that's essentially what he meant by 真正連帯債務) and maybe a week[couple of days] (ed. HAHA I’d forgotten that I’d blogged it two nights ago) since he mentioned, almost in passing, that it would be a 50/50 split. I was surprised on both occasions when the media failed to take note. It's probably hard for people who don't go to the source to realize that the power utility that everyone loves to vilify is facing strict liability. It would be difficult IMHO to prove negligence, since TEPCO had jumped all the legal hoops up to the Fukushima disaster. Government negligence should be easier to prove, since it was the one who decided not to require more precautions despite some expert opinion to the contrary. With power comes responsibility. But 50/50? I wonder where that came from. Surprising to hear a lawyer—Edano—make that concession before the inevitable negotiations with TEPCO. I wonder if the fix is already in.

All in all, I'd go for Article 3, paragraph 1; it heals you, whereas Article 16 only keeps you alive, and who wants to be on life support for the next 20 years…Oh, Dr. Kerkevorian...

The Japanese Government’s Liability around the Nuclear Disaster: or, Edano Got Game

Chief Cabinet Secretary Yukio Edano has quietly but firmly made it clear that the Japanese government is jointly and severally liable (he apparently invented what appears to be a retronym—真正連帯債務—to emphasize the point) for damages arising from the Fukushima nuclear disaster. Yesterday (? Monday), he went on record as saying that the government and Tepco would be responsible for half each of the (according to the latest estimates) 4 trillion yen tab. When everybody is finding it convenient to dump on Tepco, he’s injecting a little lawyerly reality into the process without being called a Tepco lackey. That’s quite a feat.

The Ebb and Flow of the Anti-Kan Forces

Some headlines from the online Yomiuiri:

23 April: “Diet Members Aligned with Ozawa to Step Up Efforts to ‘Depose Kan’ When New Week Begins (小沢系議員、週明けから「菅降ろし」本格化)”
26 April: “Prime Minister: ‘Must Be Candid in Admitting Loss’ in [Nationwide] Local Elections (統一選「率直に敗北と認めざるを得ない」…首相)”
27 April: “60 [Diet Members Show Up] at Study Group to ‘Depose Kan’…Heavy Ozawa Influence (民主「菅降ろし」勉強会に６０人…濃い小沢色)”
29 April: “[National Labor Union] Rengo Chairman Koga: ‘Ceaseless Conflict within DPJ Regrettable(連合・古賀会長「民主党の絶えぬ対立は遺憾」)”
01 May: “Will Refrain from Efforts to Depose Kan for the Time Being…Ozawa, Hatoyama Agree菅降ろし、当面控える…小沢・鳩山両氏が一致)”

In the meantime, on 29 April, the DPJ, LDP and Komeito—but no PNP, which fact being totally ignored in the MSM—come to an agreement on the first supplemental budget that allows the Kan administration to finance it mostly with “buried treasures” initially allocated in the FY2011 budget to subsidize the national pension fund. The reallocation as well as the child allowance and toll-free highways—two items in the DPJ manifesto that are being scaled back to finance the supplemental budget—and other expenditure items will be revisited when the second supplemental budget is formulated. This will be the basis on which the three parties will work to formulate and enact the FY2011 deficit bond authorization bill.

The MSM is still taking at face value the LDP and Komeito’s claim that they want Kan out. But I think that my assessment in my previous post (29 April) makes more sense in the light of this sequence of events. Note also that Ozawa’s bark as passed along by mostly anonymous associates and illustrated by the poor attendance at his anti-Kan rally is proving to be worse than his bite.

Let’s Be Nice to Our Prime Minister; It’s a National Holiday, for God’s Sake

Kaoto Kan, currently Japan’s prime minister, is not exactly my favorite politician, but surely he deserves some credit for what he is trying to do. He does have a policy agenda that is relatively coherent and more consonant with the pre-Ozawa manifesto as well as the post-3.11 realities. Moreover, the opposition parties as well as Ozawa’s allies in the DPJ are not well-positioned to force him out. That doesn’t mean that he’s in the clear until the DPJ leadership election in 2012, but I think that reports of his imminent demise are very much premature. If you’re interested, please read on.

---

He continues to push ahead on social safety network reform coupled to a consumption tax hike despite last year’s upper house election setback. This is a reversion to the DPJ’s pre-Ozawa manifesto. Scaling back the child allowance also brings it more in line with the pre-Ozawa manifesto. Add the reduction in scope for agricultural income subsidies—remember that the DPJ linked the money to trade liberalization—and it’s pretty clear that Kan is trying to pull the DPJ back toward the urban orientation of its pre-Ozawa/Hatoyama days. From this perspective, I see no reason to think that he won’t revive his TPP initiative, once the relief and recovery process is fully on track and the nuclear situation is stabilized so he won’t look like he’s kicking the Tohoku and Kanto farmers while they’re down. Toll-free highways—another big ticket item—had already been scaled back substantially by Seiji Maehara as Minister of Land, Infrastructure, Transport and Tourism when he was forced to cough up gasoline tax revenue to finance Ozawa’s old-school politics road-building plans, but the majority of the Japanese public won’t be sorry to see that experiment die.

So Kan certainly does have a policy program, though it is poorly articulated. Perhaps that is by design; he doesn’t want to completely alienate the DPJ’s pro-Ozawa wing, which has pretty much been frozen out of the policymaking process and is using the manifesto as a rallying cry. There’s also the matter of his surprising—to me at least—lack of communication instincts judging from his performance as prime minister. Still, if you look beyond the headlines in the media and the criticism from his DPJ detractors, his policy agenda in my view is both more coherent and more consonant with the PDJ policy agenda before Ozawa altered it, likely for electoral purposes.

But what are his political prospects? A few things to keep in mind. First, the LDP calls for Kan’s resignation are not to be believed. The last thing that they want is to go into an election against a DPJ under rejuvenated leadership. Second, Komeito does not want to lean on the Sokagakkai troops again so soon after the “nationwide” local elections. Besides, it currently has enormous leverage over the DPJ now because of its ability to deliver an upper house majority by itself. Komeito can marginally increase its leverage through a lower house election if it results in a near-equal DPJ-LDP split, allowing Komeito to give a lower house majority to either of the two major parties. I say “marginally” because choosing the LDP would mean that the administration would have to work with an upper house minority. Why upset the political cart for a new lower house configuration that could trigger further political realignment? On this side of the aisle, the SDP has lost just about every general election since it sold its pacifist soul to buy the prime minister’s office for Tomiichi Murayama. There is no reason to believe that the next election will be any different. And the formal coalition partner PNP is what it is. The DPJ loses one seat and there goes the DPJ-PNP-SDP’s joint lower house supermajority, and with it what remains of the PNP’s (and SDP’s) leverage. As for Ozawa’s DPJ allies, if they manage to secure enough breakaways to pass a lower house vote of no confidence in the Kan cabinet, their lower house members will have to fight a three- or four-way battle against the DPJ, LDP, and Your Party. And many of them are first-termers, who will surely be at least as vulnerable as the Koizumi Kids. All this does not mean that

This does not mean that Kan’s path leading up to (but not including) the 2012 DPJ leadership election is clear. There is always the chance that the opposition parties and Ozawa’s allies will wind up pushing Kan too hard, with results that at least some of them do not want at all. Wars have been started that way. More plausibly, if Kan looks so bad that his DPJ supporters start abandoning him, that’s the end for him. He may be stubborn, he may have a massive ego, but he’s not so selfish that he’ll take the DPJ down with him by calling a snap election. He’ll step down, leaving it to someone more articulate and telegenic to lead that charge. Don’t even rule out Ozawa’s arch DPJ nemesis Yukio Edano in that case; politics makes strange bedfellows.

And beyond all the politics, there is the matter of genuine policy differences. Kan does have a policy agenda that is significantly at odds with what Ozawa and his DPJ allies profess, never mind their motives. This chasm also exists within the LDP as well. And reform is afoot in the upper house, although the next election there is not due until 2013. Feel free to make your own inferences here.

Kan’s Second Week Speech to the Nation and My Expectations for Media Coverage

Here’s my snap reaction to Prime Minister Kan’s 7:30PM speech to mark the passing of two weeks since the earthquake and tsunami.

Speech: Somber to the point of flat and boring, designed mostly to make sure that he touched on all the important points.

Q&A: Four questions from the media about the Fukushima end game, the escalation in the government evacuation recommendations, the discrepancy between the overseas reaction and the government’s own (20-39km vs. 80km), and four stock, non sequitur answers.

I think that the print media is going to pan it. Kan definitely does not have what it takes to front a band IYKWIAS.

Associate Companies, Pus the Twit of the Day

From my outbox, lightly edited, plus some supplemental, inappropriate material…

I’ve been telling people that not all the heroes at Fukushima I were TEPCO employees (or JSDF soldiers or Tokyo Metropolitan firefighters for that matter) but were actually employees—possibly even temps—of “associate companies.” Well yesterday (24th), radioactive material was detected on three men working the site, of whom two were hospitalized for treatment. None of them showed any “external damage.” (Some of you will have read that they suffered “radiation burns.” No one has confirmed that, but Japanese media outlets explicitly mention that there was no “external damage.” For another MSM case of adding heaps of sizzle to an already pretty juicy steak, see this report. No, I’m not really following the foreign media; it’s all I can do to keep an eye on what the Japanese media is reporting. But it seems like there’s a lot of that going on. That makes it all the more important that the Japanese government (and TEPCO) get the information out there in English quickly and clearly—which I know for a fact that they are working very hard to do. Many of the people covering the case know nothing about nuclear power or have been flown in or in some cases both. But that’s the government’s problem, not theirs.) They’d been wearing ankle-high shoes in a space whose floor was drenched in water, while the other workers had knee-high rubber boots on. Am I surprised that the three had been dispatched by an “associate company”?

And now for the Twit of the Day:

Seiji Matsumoto, one of Naoto Kan’s former political aides is an assemblyman in the city of Musashino. Japanese netizens mopped the virtual floor with Matsumoto’s name because he had issued a flyer report where he noted that TEPCO’s Musashino office had notified him that the urban areas of Musashino, hospitals, and Group 1 areas would be excluded the like and that “Seiji Matsumoto’s requests have been answered.” Matsumoto denied any malicious intent and stated on his Twitter account yesterday that he is “sorry if part of the text has been the cause of misunderstanding.”

Yes, we Japanese have also mastered the art of apologizing for the stupidity of the offended. But that’s not end of it, because this story is going to be out there in cyberspace to be plucked till time and times are done, like Paris Hilton’s sex tapes and Sarah Ferguson’s toe-sucking rendezvous and…well you get the idea. So, are we all going to become more careful when we put stuff out there? Somehow, I don’t think so. Instead, we will become more shameless. It’ll be like, “Yeah, that’s me and my boy/girl friend at the time. Yeah, I’ve put on a little weight since them.” “Hey, but I was only fifteen then. Wanna see me now?” And he/she points you to his/her Facebook account, by which time Facebook has long since become a misnomer IMHO IMHO. And everyone will say whatever they think and won’t even stop to say they’re sorry you don’t get it and every conversation will be straight out of Overheard in New York.

Mike Smitka and Earthquake/Tsunami Economics 101

Mike Smitka mentioned in passing that he had blogs so I went to take a look. This post must be about as good a summary of the scale of the problem and the issues as there is out there. Eurasia Group has a more policy- and politics-oriented Note, distributed to its clients, that happens to broadly share the same understanding.

TEPCO (and JSDF) Employees Not the Only Heroes at Fukushima 1; Plus Sidebar to Minami-Sanriku Tragedy

TEPCO has been catching most of the flak for allegedly mishandling the response to the nuclear crisis at its Fukushima 1 Nuclear Power Plant but its 50 or so employees who have been putting their lives at risk to contain the danger there have been rightly hailed as heroes. Now the Sunday papers remind us that they are not the only ones. According to this Yomiuri report, of the 160-man team who have been braving high-level radiation to connect the four at-risk generators to the grid in an attempt to revive their cooling systems, 50 have been dispatched by a kyōryoku kigyō, or “associate company.” If “associate company” sounds suspiciously like the “associates” in America—as far as I’m aware, business-speak to make employees feel more valued without having to pay them accordingly—you’re right. They’re the shitauke kigyō, or the subcontractors of old, who typically carried out the more kitsui, kitanai, and kiken—“Dirty, Dangerous and Demanding”—work at lower pay and with less job security. The report is not even clear whether all the operators dispatched by the associate company are its regular employees. There are several directions in which I could take this story—it’s actually of professional interest to me because the regular/irregular employee distinction is the most important part of the labor reform debate—but I have to break off for now.

Another Yomiuri report says that Minami-Sanrikuchō, the township where 8,000 out of 17,000 inhabitants remain unaccounted for one week into the crisis, appears to have had its entire family registry database wiped out by the tsunami. The backup files at the sub-regional offices of the Ministry of Justice were also lost in the deluge. So how are the survivors going to open bank accounts, obtain passports, and do all those other things that require a copy from the family registry? It’s a very small story within the national tragedy, and legacy systems yadyada but I can’t really find any excuse for a national system that’s still being siloed locally when storage is dirt-cheap and getting cheaper and e-government is now taking a hard look at cloud computing.

How Can TEPCO Be Able to Avoid Blackouts by the End of April?

A Vice President of TEPCO—Japanese corporate vice presidents are more important than the typical American VP—said that the blackouts could be over some time in April but would likely have to return in peak-demand summer. That did seem like a very quick turnaround, so I speculated about the reasons for this optimism. Essentially, I guessed that TEPCO had a pretty good idea of how quickly the fossil fuel power plants that had gone offline could be brought back but was limited by the resources available—and of course would likely be offering a conservative estimate just to be on the safe side. Professor Michael Smitka pointed out that there would be a spring dip in demand, between the need for winter heating and summer cooling. The following is essentially a copy of a follow-up email. It turns out, there’s more. I’m sure that the public would welcome anyone with the means to create credible scenarios as a first step to quantifying economic impact. If you do that or find anything out there on this, drop me a notice and I’ll be happy to kink to it, or otherwise take note here and elsewhere. Thanks.

And yes, I am conserving energy by not producing original material for the blog.

---

I've had this thing sitting on my PC most of the day, and I've run out of energy to do the subject justice. finish it. So I'm sending it out on the Earthquake list, to which I've added people who might be interested in following up on their own, as well as some people who have been kind enough to express their concern (who may find my earlier messages amusing. Or not).

Oh, and the ads on the trains have taken a huge dip, and the self-generated, space-eater ads have come back this week. And thanks again for the lunch, DS. OJ

**********

From media reports, a couple of pieces of information regarding the economic impact:

(Mar 18) Keidanren asked TEPCO on Mar.17 to reconsider the current arrangement because 1) factories could not know beforehand when it might have to shut down (note: Yesterday, I think, TEPCO posted a weekly schedule here http://www.tepco.co.jp/cc/press/betu11_j/images/110317g.pdf--although the most detailed publicly available information from my municipal government says only that my neighborhood is a Group 2-Group 4 mixed one); and b) factories that required lengthy adjustments could not cope with daily 3-hour shutdowns. Settling into a routine turns out not to be sufficient. So the question is: Can TEPCO prioritize and make individualized arrangements for specific businesses? Industrial customers can, if I remember correctly, cut specific deals regarding security of supply, but can they be accommodated within a rolling blackout? I suspect that it's easier to deny reduce supply to specific customers in an emergency than to maintain that supply during a general supply denial.

(Mar 18) TEPCO announced on March 17 that it would install multiple 30MW gas turbine power generators in time for the summertime surge in demand. (The Philippines also installed such generators under President Ramos and wound up surprising visitors who went there expecting blackouts and saw Xmas lighting everywhere.) TEPCO would also a) raise operation rates at existing fossil fuel power plants (but would not reactivate the idle reactors at Kashiwazaki); b) increase purchase from IPPs; c) reactivate Higashi Ogishma (2GW) and Kashima (4.4GW) by the first ten days of April (上旬 for those of you who can read Japanese)., and d) reactivate old idle fossil fuel generators. TEPCO is currently down to 34GW and had been expecting the Mar18 peak load (18:00-19:00) to reach 40GW but would now be only 37GW due to the weather, household self-restraint, and the most recent round of train schedule reductions (which hit JR Kanto, the Tokyo metro system, and some private railways. Anyway,

Now TEPCO's historical peak-load summer and winter highs are 64.3GW (24 July 2000) and 55.0GW (23 January 2008) winter (http://www.tepco.co.jp/company/corp-com/annai/shiryou/suuhyou/pdf/suh02-j.pdf) while its total pre-earthquake capacity was 78.1GW (TEPCO capacity 65.0GW; net purchased capacity 13.1GW http://www.tepco.co.jp/company/corp-com/annai/shiryou/suuhyou/pdf/suh03-j.pdf). Keep digging around for more detailed information, and an experienced analyst could probably come up with a range of scenarios for the Tokyo energy situation and its impact on the Japanese economy. Of course there's rest of Japan, most significantly EPCO and the Tohoku region. Long-term, many people must be working on the global energy situation, where the future of the nuclear buildout in the emerging economies will be crucial.

Meanwhile, Life Goes on.

(Regular blogging to resume. But not now, sorry.)

TV programming has returned to normal. Cable never wavered from their regular fare—no choice, unless they went off the air completely—satellite TV I think depended on the channel and hour, but now, UHF and VHF are back to the usual evening fare. So now you on Tokyo MX you get Ranma 1/2 instead of Governor Ishihara ragging Renho—a la Magic/Michael/Ichiro IMHO—and the cub reporters who cover the Tokyo beat, the other local UHF channels are back to their own animes and teleshopping programs and the national channels feature what appears to be their usual 7PM slapstick variety shows and the like. NHK alone continues earthquake coverage, which is only sensible given their mandatory fee charging privilege.

This trend was evident yesterday, but some networks had held back then. Also expect earthquake/tsunami coverage to come back with a vengeance during cheap, daytime coverage. But the trend is clear.

There’s nothing wrong with this. It’s only human. I’m just taking note of this for the sake of posterity. And now, the Emperor has spoken. I think all this means that whatever happens in Fukushima, it’s our 8.15 and we have to move on.

And speaking of posterity, those of you living in Tokyo, have you noticed how the advertising in trains had changed the last month or so before 3.11? There were still artfully disguised gaps, but there is little the of self-generated advertisement—you know, the space-eating stuff from subsidiaries and sister companies within those railway-centric chaebols—covering the revenue shortage. That is something to keep an eye on going forward.

SOTU: I Don’t See England, I don’t see France

But I do see Europe.

Yesterday, Paul Sracic emailed me his quick response to President Obama’ State of Union address, which included the following take on Japan:

No one in the U.S. will care about this, but Obama mentioned China, India, and South Korea several times -- but never Japan. Do you think that the Japanese people will care/notice this?

Sure enough, the story showed up later that day on the Yomiuri and Sankei websites (and this morning in the Yomiuri and I sure Asahi hardcopy versions). Paul is an expert on US politics (he’s quoted on the SOTU itself in a Reuters wire), but he obviously figured out how the Japanese mind works while he was in Japan on his Council of Foreign Affairs fellowship Fulbright Scholarship. The headlines say it all:

Yomiuri: “Japan” Goes Unmentioned This Year Too: exhibits the strengths of South Korea, China (hardcopy version)
Sankei: Country Names Mentioned in Obama Speech: South Korea Most Often, at Five; Japan Zero (online version)

Sankei does the whole SOTU BRICs count: China four times, India three times, Russia twice, and Brazil once. (Ian Bremmer believes that Russia isn’t a real BRIC, but that’s another story.)

If this sounds familiar to you, you’re right. We went through this during the 2008 presidential primaries, when many people here gave John McCain the thumbs-up over Hillary Clinton in the Foreign Affairs essays contest because McCain issued a paean to the US-Japan relationship while Clinton mentioned China more often than Japan. Note, though, that Clinton’s essay was more about the foreign policy and security challenges that the United States faced, and how she would deal with them. Obama is naming names mainly as countries that are doing things that the United States should emulate at home. And no, as the Sankei count shows, England and France don’t show up either. But Europe does, as in: “Countries in Europe and Russia invest more in their roads and railways than we do.”

The silver lining for Japan is that this wakeup call is good news for people here who are pushing reform.

Giving Kan Some Credit (though He Hasn’t Really Earned It)

Prime Minister Kan is trying to take the DPJ back to its reformist roots. His two most important policy initiatives:

1) putting the social safety net on a sound footing by raising the consumption tax rate; and
2) pushing economic reform by re-linking agricultural subsidies to FTAs—I’m talking about his bid to have Japan join the US initiative on an expanded Trans-Pacific partnership

revive the arguably two most important policy goals that Ichiro Ozawa threw under the bus when he beat Kan in the 2006 DPJ leadership election. His efforts to sideline Ozawa and his minions point to another key element of what the DPJ stood for until its fateful merger with the Ozawa forces—no more politics as usual. So why isn’t anyone giving Kan any credit for this? Or at least taking note? Could it be the reflection of an anti-DPJ bias in the MSM, which some political scientists (SR, JC, etc.) whom I know and respect claim exists?

I lay the blame squarely at the doorsteps of the prime minister’s office. Circumstances aside, it’s due to Kan’s inability to project a coherent political message and stick to it. In fact, if there’s one thing that the Founding Fathers of the ultimately successful anti-LDP movement—Ozawa, Kan, Hatoyama—it’s their inability to articulate what they stand for (something that has surprised me in Kan’s case) and give the appearance of staying on message. Another common thread that binds them, though, is their stubbornness. And that is what keeps their clocks ticking, even Hatoyama’s, who has decided that he is indispensable to Japanese politics after all. And keeps Kan plugging away, to turn the clock back to the future, the future that the DPJ saw, before it lent the eaves to Ozawa and almost lost the house.

Give Kan credit though; he isn’t giving up any time soon, like some beta version of the first-generation Terminator.

The Difference between the LDP and Komeito…Why It’s premature to Write Off the Kan Administration Just Yet…Plus My Pick for Kan’s Replacement

Opinion polls show the Kan cabinet dropping to near-last gasp Hatoyama lows and the DPJ falling behind the LDP for the first time in what seems like ages—when you are going through five prime ministers in four years, time seems to go by rather swiftly. So, is it time for a quick Kan write-off and a turn to a freshly recycled... Okay, not so great an idea, which may be one reason why nobody, not even an Ozawa surrogate, is willing to mount a leadership challenge. Still, with an opposition majority in the upper house, the April local elections (mayors, prefectural and municipal assemblies) looming, fragging from Ozawa and other discontents, and the media eager to promote major political upheaval, the Kan administration’s immediate prospects look dim. Or do they?

It is no secret that the DPJ is pining for Komeito, the one party—other than the LDP, which doesn’t count—that can ensure an upper house majority and erase the need for sucking up to the tiny SPD, former coalition member on the fringe-left, which can secure a lower house supermajority to force legislation past upper house opposition vetoes. (The problem with lower house overrides is that they will greatly increase the likelihood that the DPJ comes tumbling down in the next general election.) But conventional wisdom says that because of the April elections, the Ozawa smell test, and the sheer political inertia of the LDP-Komeito coalition years, Komeito is finding it difficult to provide assistance to the beleaguered DPJ, Kan or non-Kan, despite the shared urban, centrist leanings that would otherwise make the two parties natural allies. So it must be a relief to DPJ strategists to see that Komeito telegraphing its intent: We will fight the DPJ in the upcoming Diet session, but we will not push it over the brink and force a lower house snap election that the Soka-gakkai does not want.

For those of you who can’t read Japanese, Katsuya Okada, Kan’s second-in-command who runs the DPJ political operations, reiterated the Kan administration’s willingness to accommodate the opposition in order to avoid gridlock in the upcoming Diet session on the FY2011 budget, a turn of events that would doom the Kan administration and significantly raise the probability of a politically dangerous snap election. The opposition’s response?

LDP whip: We must create a political situation at the fiscal year’s end [March 31] where [budget-]related legislative bills will be voted down in the upper house.
Komeito whip: (The budget bill) has an extremely large number of problems, and [we] oppose it.

In last year’s extraordinary Diet session, Kometio voted against the supplementary (stimulus) budget but voted for the budget-related bills. Barring political failure of catastrophic dimensions, this means that Kan will survive the upcoming Diet session, which makes him an odds-on favorite to survive until the 2012 DPJ leadership election, when my money will be on a run-off victory by the top challenger, who will then call a snap election and win a new mandate for the DPJ.

Which begs the question: Which challenger? Good question, and the main reason, if some experts are to be believed, that the DPJ cannot afford to ditch Kan just yet. My pick: Goshi Hosono. He’s only 39, only in his fourth term as a lower house member in a society where seniority still matters, and has never served as a cabinet member. But neither did Shinji Tarudoko, who made a credible show of challenging Kan in the DPJ’s last leadership election despite similar shortcomings. Which brings me to what I think is the clincher. Hosono has something that none of the other telegenic, articulate policy wonks has: he’s on good terms with all the main actors, from Seiji Maehara to Ichiro Ozawa. That’s like playing for both national sides in the Japan-South Korea Asia Cup semi-finals. Go Blue Samurai!

---

My thanks go out to the people who have asked me why I haven’t been blogging recently.