My Thoughts on Prime Minister Abe and His Administration

I thought I’d reboot my blog with my thoughts on the significance of AKB48 but I decided to take it easy and post my talking notes for a panel discussion last Thursday instead. I never got to use them because of a technical failure (mine), but it was just as well, since they lack the cadence for proper oral delivery. Still, my quotes in this Reuters report grew out of the panel discussion—Linda Sieg was one of the co-panelists—and I thought that the notes would give my comments more perspective. It may seem at first glance that I am much more critical in the Reuters report than I was in the panel discussion (where I think that I stayed mostly on message). But I think that I was just explaining over the phone why I would be “pleasantly surprised”. And believe me, even half-way would be a huge improvement, but a huge chore. As someone who has to live here, with children who are likely to spend the large part of their life in Japan, I’ll be more than happy to be humbled by Mr. Abe.

1.    your initial thoughts on your personal impression of Mr. Abe and his performance as Prime Minister since last year’s election. 3-4 minutes. Focus only on one or two key points.

Mr. Abe has performed admirably on both items in his job description: policy and the politics. And he has done that through a mix of a) audacity and b) caution. That’s one point, or two, depending on how you count. The audacity, to go all-in against BOJ/Ministry of Finance orthodoxy and the instinctive advice of most business leaders and to use monetary policy to knock down the yen—oops, sorry, of course he meant create inflation—generating a significant upswing in the Japanese economy and public sentiment in time for the July upper house election. That’s policy. And the politics? The audacity to run for the LDP presidency against the incumbent, his own nominal faction leader, and the advice of the real power behind the throne, and leave little acrimony behind.

The caution? The caution to tiptoe around serious corporate tax reform, labor reform, agrarian reform, healthcare reform; essentially, the caution to avoid alienating any specific constituencies ahead of the July upper house election. In a similar vein, the caution to take his time in declaring for the Trans-Pacific Partnership negotiations, while enduring the minor inconvenience that the delay is causing. That’s caution on the policy front. The politics? The caution evident in the way that he has largely avoided broaching his views and ambitions around his “values” agenda: history issues, Yasukuni, patriotism, school curricula…all those issues play well to his core constituencies but they only damage our relations with our East Asia neighbors, which worries our ally the United States as well as Australia and other allies that cannot shake off memories of the Pacific War. Then there’s the caution in assembling a steady if not quite spectacular cabinet and a subcabinet team of highly capable politicians and bureaucrats familiar to him from the Koizumi regime and his own.

Of course, it’s even better to be lucky, and Mr. Abe has had more than his share of luck. First, Sadakazu Tanigaki, the LDP president, was a weak if well-meaning figure with minimal personal support within the party. Second, the DPJ’s politically disastrous three-year reign lowered the bar for any incoming administration. Third, Mr. Abe came in as the US economy was recovering and the EU was showing signs of finally stabilizing, and the effects of the Chinese slowdown are so far being masked by the return to normalcy in the commercial relationship as well as the lack of commodities exports to China.

There you are: audacity and caution, plus a lot of luck. Two focus points.

2. the question of Mr. Abe’s background, where he comes from and how this shapes his beliefs and ambitions today.

Mr. Abe is by no means the only LDP politician who has essentially inherited his satrapy from his forebears, and his political philosophy and political positions must be shared, broadly speaking, by a healthy majority of LDP Diet members. However, whereas most other heirloom politicians come across as proprietors of the family business, Mr. Abe embraces his family legacy wholeheartedly. And viscerally, as his disdain for progressives dates back by his own account to his preschool days and persisted through his high school years. Actually, his grandfather’s legacy, since most of his political references harken not to his father but to Mr. Nobusuke Kishi, the former prime minister who was deeply involved in mid-20th Century Japan’s colonial and war efforts. Not that Mr. Abe wants to take us back to 1941, 1937, 1931, or even 1910, when Japan finally swallowed Korea lock, stock and barrel. But he definitely wants us to take us back to what we were, or imagine we were, in 1904-05, 1894-95, and 1853. That may be a selective and shortsighted view of what we were, but what national myth isn’t?

There are analysts who think that once Mr. Abe has an unassailable majority in both houses, he will indulge himself in his “values” agenda to the detriment of the economy. I wouldn’t worry about that possibility. If there’s one phrase that epitomized post-Black Ships, pre-WW II history, it was Fukoku Kyōhei, or “rich country, strong military”, and if Mr. Abe forgets, his chief cabinet secretary will be there to remind him that it’s the economy, economy, economy.

But does any of his economic ministers have the vision and determination to carry out the transformative reforms that are needed to bring the third arrow to full strength? More important, does Mr. Abe have the vision and determination to provide a ministerial surrogate with the mandate and the political capital to achieve that? When Mr, Koizumi stepped back, the Takenaka reform faltered. The pure reformists on the Koizumi-Takenaka team have long left government, and only Takenaka himself brought half a leg into Mr. Abe’s process. I’ll be pleasantly surprised if Mr. Abe brings home the desired reforms even halfway.

Rich country, strong military.

3. The transformation that has taken place since his resignation in 2007 and his second term. What prompted him to run again? What have been the drivers of this change? Who has been behind it?

I think that Mr. Abe always intended to run again. There was unfinished business, and he was still only 57. But to run at that point, there had to be something more. He witnessed with alarm the looming national security challenge from China, which would push every advantage it had. And he did not see Mr. Tanigaki as a person that could push back effectively. He saw Japan’s economic difficulties, both chronic and acute, and believed that the mixture of stop-and-go stimulus and half-hearted monetary easing of the 90s and the aughts would not do. And he did not see Mr. Tanigaki capable of resisting the MOF-BOJ axis behind those policies. He also must have looked at the field and found each wanting, one way or the other.

There is also the matter of his health. Conspiracy theories aside, he would not have run for the LDP leadership without the dramatic improvement as the result of newly available treatment. As I said, luck matters.

I’m sure that he consulted associates before he made his intention to run known to the faction leader, the shadow daimyo, and other figures who would be less amenable to his candidacy. But at the end of the day, I believe that it was his sense of mission and destiny, and his understanding that an opportunity unseized may never return that eventually convinced him to run. Of course he had significant support from his generational peers, who probably regarded his main rivals Shigeru Ishiba and Nobuteru Ishihara, who both more or less bought into the emerging national security agenda, as less likeable or less competent.

4. The dynamics of his cabinet and the LDP. Who has power and influence and how will this shape the post-election agenda?

On the economic front, I think that the influence of Mr. Taro Aso, the Finance Minister, is overrated. Mr. Akira Amari, the cabinet minister in charge of economic and fiscal policy, in effect the reform czar, is competent, hard-working, very serious, but he’s not an initiator. Toshimitsu Motegi, the Minister of Economy, Trade and Industry, is probably the smartest of the bunch, but he’s not the kind of person to overstep the boundaries of METI jurisdiction. Mr. Abe owns monetary policy, but he doesn’t own the other three arrows in the Abenomics quiver in quite the same way. So, we wind up with the three arrows, but we’re not being told, except in the most primitive manner as talking points, how the three arrows complement each other.

On foreign policy, he has appointed Fumio Kishida, about as moderate, middle-of-the road as LDOP politicians get to be. Itsunori Onodera, the defense minister, who may be closer to Mr. Abe’s mindset, is also a relative lightweight. It is in this sphere that Mr. Abe will be more intimately involved in driving policy post-election—not that he is disengaged by any means so far.

It is hard to see how and by whom the hard decisions regarding economic reform will be made post-election, though, unless Mr. Abe injects significant political capital into this process. Yoshihide Suga, the hardworking chief cabinet secretary, certainly cracks a mean whip, but specific policies will not be forthcoming until Mr. Abe puts his political weight behind it. If he does, though, the political appointee team will do the grunt work, and the political team will fall in line—as long as the economy holds.