Friday, July 31, 2009

The Defections, and the Difficulties of a Post-Election Breakout

And now there are two; three if you count Yoshimi Watanabe. Motoko Hirotsu, failed Post-Office assassin (target: heirloom turkey Kosuke Hori of the Saga 3rd District) who rode the Koizumi coattails on the Kyushu proportional representation bloc ticket, has left the LDP to stand for election in the Saga 3rd District as an independent. She follows fellow Koizimi Kid Koichi Yamauchi (Kanagawa 9th District) as LDP defector on the eve of the upcoming Lower House election. So, are they rats abandoning the LDP ship? Yes, but…

Actually, Hirotsu’s defection in some ways more closely resembles the exile of a more significant figure—the DPJ’s shadow defense minister—Keiichiro Asao, who was kicked out of the DPJ when he decided to vacate his Upper House seat and run for election in Kanagawa 4th District against the official DPJ candidate, reportedly spurning a last-ditch DPJ offer of the Kanagawa 8th District, still without an official candidate. This is not completely analogous to Hirotsu’s action, which appears to be a one-off decision propelled by the understandable fear that she may not make it this time by way of the PR bloc ticket, on which she would be forced to run. But the two share one thing in common: They both abandoned their respective parties not on a matter of principle but because they were not able to stand for election in a single-member district (of his choice in the case of Asao*). Hirotsu’s choice makes even more sense when you notice that the DPJ does not have a candidate in Saga 3rd District; instead, it is supporting the Social Democrat candidate there—seriously, do you really believe that the DPJ honestly wants to help the SDP’s chances in the Lower House election, especially when it sees very good chances of a simple one-party majority outcome?

But this is what passes for pre-election buzz. Note that Kunio Hatoyama has been all talk when it comes to moving out. And mini-warlord Hidenao Nakagawa has more or less stepped into line. Just as significant, the second most powerful Post-Office exile (Shizuka Kamei comes first on my ballot), Takeo Hiranuma, hasn’t been able to cobble together a meaningful political movement after four years in the wilderness. It’s also meaningful that the only people that the nascent Watanabe-Eda movement has able to attract so far have been has-beens and wannabies. With one month to go before the election, incumbents are not exactly in the mood for party rebellion. They’ll take what their parties give them—it they like what they see. But nobody seems to be in the mood to pull a wheel off the bandwagon while he/she’s still on it.

Seems sensible. But what about post-election? Well, never say never, but remember, in the aftermath of a DPJ victory, an important factor argues against a post-election breakout from LDP Lower House members. A LDP Lower House defector elected from a PR bloc after losing to his SMD rival in the DPJ (or PNP/SDP) will have an impossibly hard time dislodging him, while an LDP LH defector elected from an SMD will have to face down his erstwhile opponent, who is likely to have made it past the post on the PR bloc ticket. Yes, a successful pre-election LDP defector will also be unwelcome to the DPJ candidate that he/she beat out, but at least the ex-LDP, independently-elected LH member can lay claim to being the undisputable alpha dog in his/her SMD, having beaten out both the major-party candidates. On the other hand, staying in the LDP after a successful SMD campaign means that you are a survivor, a battle-tested member of a 100-to-200-strong corps with a proven, ironclad clamp on yourr local constituency. Why do you have to stoop to becoming a very junior loser-collaborator in a DPJ-dominated administration? Why can’t you afford to wait 3-4 years, max, in the political wilderness while the DPJ comes to grips with a decidedly difficult reality?

I’ve been wrong before, and I’ll be wrong again. And I do not claim to be a good reader of men’s hearts, present, or future. But the counterargument about LDP Diet members’ inability to endure the role of the opposition needs to supplemented with more substance.

* I received credible information before Asao’s breakout that pointed to him as the “relatively young but important figure in the DPJ” that Hidenao Nakagawa was conspiring with to form a third force in Japanese politics. If that information was correct, even the offer of the 4th District might not have kept Asao in the DPJ fold. My argument, in any case, is that such a post-election breakout will be very difficult.

Sorry, responding to comments often takes more time than doing posts of similar lengths. I promise to get back to you, but not now.

Wednesday, July 29, 2009

As My Drinking Binge Continues, I Stumble onto…

Parental discretion advised…

anal sex was akin to “shoving a straw up your nose to drink.”


Hey, the professor may have a point—not that I know anything about that. But you know what really, really surprises me? It’s that shoving a straw up your nose to drink is illegal in Singapore.

North Korean Beer Commercial?

So says The Daily Dish. I think that this 2:34 minute commercial will turn out to be a hoax. But maybe that’s just me.

Monday, July 27, 2009

LDP Pisses off Chinese Ambassador. And What Else Is New?

A colleague sends me an article whose headline reads, “China protests as Uighur leader plans Japan visit”… and I am tempted.

So, can you spot the differences?
China's ambassador to Japan, Cui Tiankai, voiced Beijing's anger over the planned visit in an interview with Kyodo News and other media, and hinted that ties between the two nations could be hurt. “She is a criminal,” he was quoted as saying by Kyodo, reportedly likening her to the cult leader behind a 1995 sarin gas attack on Tokyo's subways. "How would the people of Japan feel if a violent crime occurred in Japan and its mastermind is invited by a third country?"

China's ambassador to the United States, Zhou Wenzhong, voiced Beijing's anger, and hinted that ties between the two nations could be hurt.”She is a criminal,” he was quoted as saying, reportedly likening her to the Unabomber. "How would the people of United States feel if a violent crime occurred in China and its mastermind is invited by a third country?"
Let’s hope it’s more than just Shoichi Nakagawa and friends.

It Takes a Thief…

I was in Kasumigaseki [as a bureaucrat] for almost 34 years. So the administrative authorities (役所) can’t fool me with their fraud and trickery.
—Hidesaburo Kawamura, DPJ Lower House candidate in Miyazaki 1st District
Most of the attention in Miyazaki 1st District has been trained on the infighting between Nariaki Nakayama, the LDP incumbent who announced his retirement but has subsequently reconsidered his decision, and Mitsuhiro Uesugi, whom the Miyazaki Chapter had selected in the meantime to replace him. Nakayama has the support of his faction, which has produced three of the last four Prime Ministers and whose support was crucial to Prime Minister Aso’s victory last year. This can only help Hidesaburo Kawamura, the DPJ candidate. Kawamura spent his entire working life in the Ministry of Agriculture, Forestry and Fisheries until December 2006, when he resigned to run in the Miyazaki gubernatorial race, which he lost to comedian Hideo Higashikokubaru.

Saturday, July 25, 2009

What If the DPJ Did as Well as the LDP Did in the 2005 Popular Vote?

What would the overall outcome of the upcoming Lower House election look like if the DPJ do as well in the proportional representation blocs that yields 180 out of the 480 seats as the LDP did in its historic 2005 landslide victory under Koizumi? Not good at all—if you’re rooting for the DPJ. If the DPJ wins only 77 PR seats in the Lower House election, it is hard to see it winning a simple majority. In fact, in that case, I think that there’s a very good chance that the LDP and Komeito combined will end up with more LH seats than the DPJ alone, and that they can even dare to hope for a majority. Here in my view is the reason why:

Let’s assume that all the other parties except the LDP each earn more or less the same proportion of votes (and seats) in the PR blocs give or take a couple of dozen basis points as they did in the previous 2005 election—not an unreasonable assumption if you look at how Komeito, JCP and SDP have fared in the last couple of very different LH elections. The PNP and NPJ only go back as far as the last election, and this time around there will also be a couple of new groups of has-beens and wannabies clustered around Watanabe-Eda and Hiranuma respectively, not to mention a few renegades from the LDP and (surprisingly to me) the DPJ. But let’s assume that all of this will not collectively throw off voting patterns by whole percentage points. If you accept these assumptions, you are also accepting the assumption that the LDP will gain more or less the same proportion of PR votes (and likely seats) as the DPJ did in the 2005 election, which means that we are assuming that the LDP and Komeito will have in the neighborhood of 61 and 23 PR seats respectively, or 84 PR seats between them—7 more than the DPJ by itself.

So what kind of guesses does this lead to regarding the 300 SMDs? Even assuming the kind of significant—say 1.5 million—drop-off in the DP-Komeito coalition vote tally from the PR to AMDs that occurred in the last two elections, the DPJ will be hard put to match the voting tallies of the LDP-Komeito coalition. Of course its two coalition partners will do their best to throw their votes to the DPJ and the JCP will provide some unsolicited help, so the DPJ could very well hold its own against the LDP-Komeito coalition there. Add to that the SMD seats that its coalition partners will win, and the DPJ-led coalition has a good chance of beating its opponent. Still, the DPJ’s path to victory, even with its coalition partners on board, is anything but clear in this scenario.

Of course the DPJ is currently enjoying much larger advantages in public opinion polls than would accompany the kind of voting patterns that would give the DPJ “only” 77 seats. If it can maintain that kind of lead on 30 August, and given the assist from the rest of the opposition, it’s a safe bet that it will win an overall majority on its own.

I’ve only done a rough approximation of the arithmetic in my head, but I’m confident that it will stand up to closer scrutiny. Any serious analysis will of course have to look at the numbers district by district, but hey, I have only one life to live.

Air Yakiniku

Chances are, you may have already seen the Air Yakiniku website. It’s creating a little buzz on the Internet—21,700 Google hits when I checked just now—and came to me by way of this NYT blog post. What most people haven’t taken note of till now is the fact that it’s brought to you by Recruit Media Communications, a media production company and member of the Recruit group. This means it’s an innovative form of corporate viral self-advertisement that is also intended to bring in revenue, as Sapporo and other food & beverage businesses set up shop in this virtual food court. Note that you have to BYOB to the Sapporo “restaurant.” I don’t see the virtual food court having a long shelf life—it’s not really addictive, unless RMC keeps adding new features and new advertisers, which may be difficult to do.

Sorry, I’ll respond to you later, Matt. And my lack of attention to your previous comment, Mark, continues to weigh heavily on my heart.

Perhaps not by pure coincidence, I found the link in my email box on the same day that I’d seen on the subway for the first time a Smirnoff Ice Spice ad featuring three circular panels of a man mixing an air cocktail. Each of the panels was entitled (somewhat misleadingly) “air cooking story.”

Saturday, July 18, 2009

Odds and Ends from the 12 July Tokyo prefectural Assembly Election

Ozawa’s expression of his desire to see the U.S. military off except for the 7th Fleet and the DPJ’s near-incoherent backtracking wherefrom could be dismissed as Ozawa being his resentful yet curiously disinterested self. Hatoyama’s extemporaneous ramblings about the Three Non-Nuclear Principles could be dismissed as more of the the usual from the Hatoyama family. But his most recent admission that a DPJ administration will not pull Japan’s Maritime Self-Defense Force out from the refueling operation in the Indian Ocean and newspaper “leaks” regarding DPJ softening over issues surrounding the U.S. military presence in Japan are signs that the DPJ is confident of victory—a DPJ plurality plus a coalition majority—and that it understands that it is time that it got what could become a major foreign policy/national security distraction, i.e. a rift between Japan and the U.S. particularly under a U.S. Democratic administration. The recent efforts by the U.S. Defense and State and Defense Departments, who had been dispatching regional portfolio chiefs (AS and DAS class) to twist arms must have been very useful in bringing the DPJ into line.

On a collateral point, that the DPJ is willing to incur the wrath of the Social Democrats indicates that it sees the SDP holding a very weak hand. And no wonder—the SDP was only able to field two candidates in all of Tokyo, one each in a 6-seat district and an 8-seater. The two SDP candidates received 3% of the votes in their respective districts—only 1/3 and 1/4 of the number of votes that the winner with the least votes in their respective districts received. In Tokyo at least, the SDP has been relegated to fringe status.

Why did the Japanese Communist Party lose 5 seats to fall to 8 while the Komeito managed to gain a seat to bring its number of Prefectural Assemblymen to 23 even though the JCP (barely) won more votes than they did in the 2005 election and the Komeito (barely) less? The LDP-Komeito coalition did a much better job sharing its votes among its candidates than the DPJ did among its own, so when the floater vote went heavily for the DPJ, the JCP bore the brunt of the fallout, that’s why. Anyone who wants to know more and can read Japanese should start here. The effect is easiest to see in the 3-seat multi-member districts.

What does this portend for the Lower House election in Tokyo? It’s hard to say unless you have the time and money to explore the districts in more detail. There were too many “unaffiliated” candidates who received substantial numbers of votes (although only two of them won seats) to draw any clear conclusions without knowing the true affiliations of those candidates. However, I think that the DPJ appears to have held a small but clear edge over the LDP-Komeito coalition.

The turnout was much higher than I had expected, and it came out for the DPJ. Even so, it wasn’t a total disaster for the LDP-Komeito coalition in terms of the votes received. In Tokyo at least, it won’t take that much of a switch in voting pattern to turn the tables in their favor.

Tuesday, July 14, 2009

Notice Regarding My Response to One of Mark’s Comments

Here, five days later, on race in America. I’ll respond to the other one as soon as I can.

The Bad Rap on Ozawa-DPJ’s Agricultural Policy

I think that Ichiro Ozawa and the DPJ have received something of a bad rap for its agricultural policy, which many people have contrasted unfavorably with the LDP-MAFF’s big business-oriented, top-down-cartelistic approach. I think this is a misperception to which I have succumbed myself in the past.

Helping Ozawa beat the rap is easy: the basic fits-all-sizes, direct payment (i.e. income subsidy) approach including frills for remote locations and organic farming appears in the 2005 election manifesto, complete with the 1-trillion yen/yr price tag. So if you want to blame someone, blame Katsuya Okada, not Ozawa.

The DPJ’s alleged sins require a little more explanation, although the fact that the program had been in place before Ozawa grabbed the reins—or the rein him, it’s kind of hard to tell with Ozawa—and possibly before suggests of itself that it is grounded in genuine socio-economic policy goals and is not merely a rural version of DPJ helicopter money tactics. In fact, the DPJ’s direct income support is more market-friendly than the LDP-MAFF’s “size matters” strategy, since it basically places the outcome of the price mechanism above the judgment of politicians and bureaucrats. There’s the 1 trillion yen price tag, but we won’t be able to pass judgment on it until we see the DPJ’s FY2010 budget and its likely four-year policy program coterminous with the Lower House mandate*.

I’m not saying that one agricultural policy is inherently better than the other. In fact, both sides shy away from the third rail, which is the tax regime that incents Japanese farmers to hold on to their smallholds, so what we have here is something of a pot-v.-kettle standoff, except that both sides studiously avoid mention of their respective backsides.

* I am pretty skeptical, but maybe that’s my ex-bureaucrat bias doing the thinking. In any case, I genuinely hope they succeed; I’m not going to do a Rush Limbaugh.

Monday, July 13, 2009

Asahi Superimposes the Tokyo Results onto the Lower House Election—Not so Fast

Asahi makes an attempt to translate the results of the Tokyo’s Prefectural Assembly election to its single-member districts (SMDs) in the Lower House of the national Diet*. According to the report, the DPJ comes out ahead in 24 out of the 25 SMDs, and all 25 if you include the successful Networks candidate—which as I’ve noted before supports the DPJ in national elections—that the DPJ supported in the remaining one. So does that mean that the DPJ will sweep the board come 30 August? (Which reminds me, happy birthday CAO.)

Not so fast. If you are going to count the Network seat as a DPJ gimmie, then the LDP will surely want to add the Komeito votes in the national tally. The LDP and Komeito will put up only one candidate in each of the 300 SMD elections nationwide between the two. The LDP-Komeito vote combined take would beat the DPJ in 7 out of 15 seats in the Tokyo SMDS included in the 3-seat-and-up multi-member districts that Komeito did contest. That’s not really fair either. You have to add to the DPJ tally the Network votes—as well as a portion of the Communist vote in the SMDs where the JCP will not put up candidates. No matter. My point is that counting the Network seat without taking into account the Kometo vote is wishfulAsahi thinking.

* I’ve reproduced the relevant Asahi image at the top since Asahi usually takes its material off-line very quickly. Asahi, like most of the Japanese mass media, essentially hates the Internet.

Sunday, July 12, 2009

A Little Historical Perspective on the Tokyo Election

Yomiuri says that 13.44% of eligible voters had voted by 11AM, up 3.19 percentage points from the 2005 elections, but down from the 3.98 percentage point margin at 9AM. So let’s say that this election winds up 3 percentage points ahead of the 2005 election: such a turnout, at 46.99%, would place the election at—14th out of 16 post-WW II Tokyo Prefectural Assembly elections. This should help political parties with rock-solid constituencies, such as Komeito and the Communist Party. It would also be an indication of public dissatisfaction over the choice between the LDP and DPJ as the core of the next national administration.

Historically, turnout has followed a downward trend everywhere and Tokyo is no exception. The assembly election turnout dropped from a 1959 high of 70.13%*, up from 1955’s 59.63%—very low for those early years—to a 1998 low of 40.80%.

But the peaks and troughs tell a story of their own. The 1959 peak coincided with the national battle over the renewal of the Japan-U.S. security relationship that was to reach its peak with the signing of the Treaty of Mutual Cooperation and Security between the United States and Japan on 19 January 1960, while the low point reached in the previous 1955 election had been preceded by a Lower House general election only a couple of months earlier. The second lowest at a 43.99% turnout, the 2005 assembly election preceded Prime Minister Koizumi’s Post Office election by a couple of months, but nobody had an inkling at the time that one month later Koizumi would dissolve the Lower House and call an election.

Although I won’t rule out the possibility that a more thorough examination may show otherwise, these examples suggest that the interest of Tokyo voters in the assembly election waxes and wanes with their interest in the national political scene. From this point of view, the disinterest demonstrated by a turnout in the mid 40 percentile range, will speak volumes about the disappointment on the part of the public on the political parties across the board.

Last Thought before the Tokyo Election

Actually, the polls have been open since 7:00AM and Asahi says voting in the first two hours was 3.98% of total eligible voters, up from 2005’s 3.20%. Could be people are out early, with a forecast of afternoon rain, but a high turnout will hurt the LDP and Komeito, who know that non-partisan voters are more likely to float to the opposition. Which reminds me of something that has been nagging me: Why did Aso draw attention to the elction by making himself so visible in the campaign? It drew media attention, and also made his denials of national impact ring hollow. That is like pushing for his own downfall before he gets to call snap election.

That’s it for now. I’ll get to your comments, Ross and Mark, later in the day.

Saturday, July 11, 2009

Notes on Tomorrow’s Tokyo Prefectural Assembly Election

The Aso camp has been insistent that it will treat a LDP-Komeito combined majority in tomorrow’s (12 July) Tokyo Prefectural Assembly election as a victory. It has also been downplaying the importance of the election, claiming that it is not a referendum on the Aso administration. Let’s take a look at the first point.

Currently, the LDP and Komeito hold 48 and 22 seats respectively for a total of 70 seats; they must keep 64 seats (out of the 127 seats) to maintain a joint majority. Let’s assume that Komeito with its bedrock Sokagakkai support keeps 22 seats. This means that the LDP takes the whole 6-seat hit, which leaves it with 42 seats. Now, assume that the DPJ keeps its 33 seats while capturing the 3 seats the national coalition partners lose, as well as the 2 currently vacant seats. This means that everyone else holds on to what it has—Communists 13, Tokyo Consumers’ Network 4, Social Democrats 0, others 1, and independents 3—and the DPJ winds up with 127 – 64 – (13 + 4 + 1 + 3) = 52, a 10-seat advantage over the LDP, with 42. Now, the Komeito may win or lose a few seats of its own, and the Communists may grab a few more on their own, God knows from whom. Still, the message remains clear: in any scenario where the smaller parties maintain their ground—a narrow LDP-Komeito victory over the DPJ is highly likely to leave the LDP badly outdistanced by the DPJ on a one-on-one basis*.

This has serious implications in a national election. Note that the 127-seat Tokyo Prefectural Assembly electoral districts consist of 2 eight-seat districts, 3 six-seaters, 3 five-seaters, 6 four-seaters, 5 three-seaters, 16 two-seaters and 7 one-seaters. This means that less than 7% of the seats are contested in first-past-the-stile elections in contrast to the national Lower House election, where the 25 single-seat districts, or almost 60% of the 42 Tokyo seats, will be subject to winner-take-all contests. In short, even a relative modest popular-vote victory can mean a landslide victory for the winner, while votes for smaller parties will be of much less significance in the outcome.

But can the LDP achieve even this modest goal?

The 4-5 July Yomiuri public opinion poll gives the following percentage breakdown of the Tokyo residents’ voting intentions for the 12 July election (2005 poll in parentheses):
DPJ……..29.4 (14.3)
LDP………: 16.9 (25.9)
Komeito….: 5.1 ( 6.7)
JCP……….: 4.5 ( 4.8)
SDP……….: 0.8
No answer : 42.7%
The DPJ beats the LDP and Komeito combined 29.4% to 22.0. This means that even if Komeito successfully throws all the Sokagakkai votes to the LDP in the 23 single- and two-seat districts and the LDP does a better job of splitting its votes between its multiple contenders in the 3-seat and up districts, the LDP has a huge a uphill battle to gain enough seats to maintain a LDP-Komeito joint majority. It looks likely that the LDP and the Komeito will hang together**.

Note also that he DPJ does even better on a question regarding the national Lower House election, at 39.8% to 25.4% (LDP 20.8%, Komeito 4.6%). This is Tokyo, where the voters are fickle, and progressive. But it’s hard to believe that the Aso administration can withstand yet another loss—which, unlike gubernatorial and mayoral elections, cannot be blamed on the candidate—and lead the LDP into the Lower House election.

* There’s also the Tokyo Seikatsusha Nettowaaku, or Tokyo Consumers’ Network. The Network is a political offshoot of the consumers’ cooperative movement consisting mostly of women. It now holds four seats in the Tokyo Prefectural Assembly and—most important for the purposes of this post—supports the DPJ in the national election. It’s not exactly Komeito, but it’s not zero-seat JSDP either, even though it has very low name recognition. If it does well in the Tokyo election, like the vote for the Communists, the results must be seen as yet another sign of dissatisfaction with the status quo, including the DPJ.

** Since nothing notable happened between the weekend Yomiuri poll and my Monday stroll at the train station, I must admit that, unless some Communist supporters are hiding their intent from the pollsters, which is always a possibility, the Communist surge so far exists only in my imagination—and perhaps my hometown, a traditional Communist stronghold. So it’s likely that the support for the DPJ that has been extended to local elections of late is holding firm in Tokyo as well. In the same context, I think that it is significant that 42.7% of the responders showed no preference for any party.

Friday, July 10, 2009

Yukio Hatoyama’s Money Woes Take a Turn for the Worse

DPJ leader Yukio Hatoyama’s issues with regard to his political finances management organization (PFMO) keep getting weirder. When he addressed the issue publicly on 2 July after completing an internal investigation employing a team of lawyers, he was left to guessing why the aide had used the names of unsuspecting acquaintances, some of them dead, to disguise illegal transfers from Hatoyama’s private account by recording them as donations from individuals in reports filed with the Ministry of Internal Affairs and Communications in compliance with legal requirements and available to the general public on the Internet*. I had been wondering why he or the team of lawyers hadn’t bothered to ask when, a week later, the saga took another turn as it was revealed that Hatoyama’s PFMO had sought and obtained from MIAC certificates that would enable a large number of these same unsuspecting individuals to claim tax credits for their donations. Now, at least some of these individuals—the ones who were alive at the time we assume—are claiming that yes, they had made those donations after all.

The best case scenario for the Hatoyama camp is that the “investigation” was so shoddy that the lawyers struck out a large number of individual donors without bothering to ask them if they had actually made those donations or not. The worst case scenario is that the aide obtained permission to use the names of Hatoyama acquaintances, and took the necessary measures to give them tax benefits as a quid pro quo, but forgot about that when he gave evidence during the internal investigation. In any case, like so many other “internal” investigations during institutional crises, it appears that the Hatoyama camp has avoided the kind of thorough process that uncovers questions that it would avoid if it only could. Except it couldn’t—wishing rarely makes things come true—and the result is a stream of embarrassing and often illegal revelations that could wind up destroying Hatoyama’s bid for the Prime Minister’s chair.

I think that attention will soon turn to what Hatoyama knew and when. He needs to explain himself, and do so soon, or he will be obliged to leave.

* It amazes me that the LDP and DPJ have not been using the information on the MIAC website to better political advantage. Is this a Japanese politics version of the MAD doctrine? But shouldn’t at least the JCP and Socialists be doing something about this?

Everybody’s Dumping on the LDP…So What Are the Alternatives?

The other day, I talked to some people who are intimately involved with but not of the LDP. This and other conversations only confirm what we’ve been seeing in the mainstream media (and the tabloids) in recent months: Aso has been an unmitigated disaster, and the LDP is in total disarray. I’ve also heard from people associated with the LDP/DPJ world speculating about a Communist surge in the 12 July Tokyo Prefectural Assembly election, or even personally voting, just maybe just voting, for the JCP.

The LDP is set to lose, in Tokyo as well as the national election, but the DPJ fails to inspire while the Socialists aka Social Democrats, long dead as the go-to protest party, has barely enough life to beg for a seat at the upcoming DPJ feast (faintly echoing the Socialists’ unholy coalition with the LDP that spawned the ill-fated Murayama Administration and destroyed the Socialists for most practical purposes). And I keep coming across anecdotal evidence that favors the JCP.

I can’t imagine the JCP coming in ahead of the Komeito in Tokyo or nationally. Still, it’s positioning itself to be the only place to go if you want to use your protest vote instead of sitting this year out—and there are an awful lot of undecided floaters still out there. If the floater do decide to go to the voting stations, chances are, they’ll end up denying a working majority to both coalitions…in Tokyo and across the nation. For that alone, the Sunday Tokyo election is worth watching.

Mark, I’ll try to get back to you over the weekend.

Wednesday, July 08, 2009

Rambling on about the Economy, More Mean Words about an Academic, etc., etc.

I couldn’t post the following as comment here since it was too long. Please read through the original post and comments if you want to make sense out of it.

My point is we should not criticize the person, but the idea. I think you’re missing out if you automatically discount ideas via their source.

There are only so many hours in a day, so many years in my life. I have no time to give voluntarily to people who have only wasted my time in return for my past attention. So the deal is this: I’m willing to read anything written in the English language about Japan by any idiot as long as it appears in a major media or other influential outlets (say, WaPo or Foreign Affairs) and is not overly long. It is, like a murder case, significant in its own right. To give an example that you would understand, liberal commentators regularly read and watch the likes of Rush Limbaugh, but won’t visit some raving right-wing blogger getting five hits a day. I also respond to any non-spam comments on my blog. I invite people to a dialog; it would be wrong for me to turn around and refuse it.

"The Japanese monetary base has taken similar leaps in past years while money supply remained stubbornly stable. ... You’ll have to turn to a real economist to have a meaningful discussion about the long-term implications if any of future exchange rates and short-term fluctuations in the US monetary base."

Don't we have an obligation to try and figure out this stuff for ourselves? How are we suppose to vote if we have to turn to various economists to determine long-range implications?

No, no more than we have the obligation to solve the Four Color Theorem—both of which BTW I have tried my hands at, unsuccessfully, at various moments in my life. Otherwise, 100% (give or take a few nano-percentage points) of the voting public would be disqualified from voting. In any case, fluctuations in the monetary base are a short-term phenomenon.

i.) The increase in the US monetary base dwarves that of Japan's during the BOJ quantitative easing period (especially if you allow for the time factor).

I think this highlights the point that fluctuations in the monetary base are a bad point to launch an argument on the long-term consequences of Obama/Bernanke’s economic policies.

I think it very unlikely the Fed will be able to reduce these holdings any time in the near future.

Okay, let’s see what happens.

iii.) The BOJ's quantitative easing was made easier by Japan's trade surplus and a high amount of savings within Japan.
iv.) America's will be made all that much harder by the exact opposite, a high level of borrowing and a trade deficit

You could also make the argument that the Fed has carried out a far more massive expansion of the money supply without creating hyperinflation or an asset bubble. In any case, since I don’t have the economic and financial expertise, I’ll just have to wait to see the long-term outcome.

v.) Japan's debt is mostly to Japanese savers, America's debt is to a large extent to foreign holders. Of course, the "foreigners" don't want to dump their bonds for obvious reasons, but other than blatant self-interest, there's nothing to stop them from doing this. They've no sense of duty to America.

By implication, I assume that it is the “sense of duty to Japan” that will keep Japanese pension fund managers buying those low-yield government bonds and holding on to them in the face of rising inflationary expectations in the future. Okay, let’s see what happens if and when the time comes.

Having spent more time on this issue over the last week, I will say that at this point, the Fed could still find some way to avoid future inflation. However, I see absolutely no political will to do so. When push comes to shove, my expectation is the Fed will keep on printing. We'll have to wait and see. (I predict very serious inflation in six months to three years.)

I have to confess that the lack of inflation (and the disappearance of hyperinflation in all but the most god-forsaken locations of this planet) since, say, the nineties, has mystified me. So let’s see if you prediction of “serious inflation” (would you care to put a number to that? 6% in US dollars? 7? 10%? 20%?) comes true.

By decoupling I mean I fail to understand why China needs America as much as America needs China…. Why can't China just make goods for themselves?

I hope I’m not misquoting you here by way of abridgement. The Chinese government obviously saw the value of keeping the export and related sectors booming in order to generate income and wealth. If it sees a serious threat of dollar inflation coming and stop buying up the foreign exchange generated by Chinese exports, this will push up the yuan, which in turn will cause Chinese trade surplus to fall and external investments to rise. The U.S. trade balance will depend to a great extent on how exchange rates and inflation rates balance out. I don’t see this in terms of one “needing” the other more than the other way around. BTW, it’s really the Chinese government’s decision to make (if it wants to) in the short-run, since it is the one that is buying up the foreign exchange generated by the Chinese trade surplus (and net inbound foreign investment) to maintain exchange rates at the desired levels.

Of course Chinese economic actors can and do make lots of stuff, some of it for the Chinese market, others for exports. They might, or might not, be able to satisfy the entire domestic demand for manufactured goods and tradable services. But I don’t think even the USSR tried that during the height of the Cold War.

A Brief Look at the Seiwa-kai’s Books

The FY2007 political financing report from the Seiwa-kai,, currently the largest LDP faction, which has not totally coincidentally produced four successive Prime Ministers—Mori, Koizumi, Abe and Fukuda—between 2000-2008 and has also stood behind incumbent Taro Aso’s “successful” bid, can be found here.

As with Prime Minister Aso’s Ikou-kai, some Seiwa-kai members are more equal than others. Rank-and-file Diet members paid 600,000 in dues, but senior members gave up 1,200,000 and ex-Diet members still in play got a discount rate of 350,000*. Mori’s Seifu-kai contributed 20,000,000—as did newly anointed faction head Nobutaka Machimura’s Shinyu-kai. Hidenao Nakagawa (now persona non grata) coughed up 10,000,000. arank-and-file Diet member received 2,000,000 in return. Now, this is only half of the 4,000,000 that Aso’s faction members received in the same year. But Upper House Seiwa-kai members who faced election that year received 5,000,000, while losers (and past losers who were still active) got as little extra at 7,000,000 or 10,000,000. Overall, the much larger Seiwa-kai appears to have taken a tailor-made approach in contrast to the Aso faction’s one-size-fits-all system, and was moreover able to help, indeed give an extra boost to, its less fortunate members. Size matters, it seems. But how different is that from any other business?

There are some variations, but that’s the general idea.

Tuesday, July 07, 2009

Sights along the Taro Aso Money Trail

The blog gifts you on this the Tanabatas Day with political financing money miscellany.

According to its FY2007 report filed with the Ministry of Internal Affairs and Communication, Yukio Hatoyama’s political finances management organization raked in 208,705,324 yen (of which 8,395,145 were carried over from FY2006) that year while incurring 159,665,501 in expenditures. Of the revenue, 49,926,000 came by way of individual donations, while 99,330,000 came from “political organizations” i.e. the DPJ. Most of the difference was made up by 45,830,000 from a single fundraising party held on 3 December 2007. Nastay! But what about the other side?

During the same period, according to the FY2007 report it filed, Taro Aso’s political finances management organization took in 193,343,250 while spending 143,911,327. However, 56,773,691 consisted of carryover from the previous FY, so the true gross revenue for FY2007 was only 136,569,559. Where donations were concerned, Aso received only 9,660,000 from individuals and 39,972,000 from political organizations. Most of the difference was made up by 84,734,240 from a single fundraising party held on 8 June 2007.

The donations from political organizations are of particular interest though. For the sole reason for the existence of six of the eleven organizations named as 50,000-and-up donors and yielding 31,500,000 or 78.8% of those donations appears to be holding once-a-year fundraising parties for Aso and his faction members*…and I don’t think the party tickets were being snapped up by goth-lolis and B-Boys. Unlike Hatoyama’s case, it’s perfectly legal, but it makes you wonder. In fact, if you go through all the reports filed at the MIAC portal, you are likely to come to the conclusion that fundraising parties will leave a gaping loophole in the DPJ pledge to ban corporate donations altogether.

There’s an interesting side story here. The Japanese Communist Party has seized on the corporate money issue**. In fact, their main line of attack for the election season appears to be that the LDP and DPJ are two peas in a pod. Yesterday, a top JCP official drew an unusually large crowd in front of the local train station. He was campaigning for the 12 July Tokyo Prefectural Assembly election, which is being seen as a virtual referendum on the Aso administration. As I passed by twice a couple of minutes apart, the official was hammering on the two-peas-in-a-pod message with a couple of talking points: the Tokyo DPJ’s near-consistent support for Governor Ishihara’s legislative initiatives***—and corporate money. The mostly middle-aged and elderly audience—it’s that kind of a neighborhood—appeared to be soaking it up. I came away with the feeling that the Communists are going to capture a large chunk of the protest vote. It’s a side story worth keeping an eye on, because if that happens, it will have ramifications beyond the 12 July Tokyo election.

* The national associations of doctors and pharmaceuticals accounted for 7,000,000 or 17.5%, or most of the remainder. The expenditures are also of some interest. Filed reports show that Aso’s organizations donated 21,500,000 (including 11,500,000 from his political finance management organization) to his faction’s political finance management organization in addition to 550,000 in annual dues from his own pocket. His political finance management organization received 4,000,000 in return like those of all the other faction members. 21,500,000 – 4,000,000 = 16,500,000 appears to be the price he pays for ownership. Even a twenty-member faction is an expensive plaything. Former owner Yohei Kono and Taro Kono pay 2,000,000 and 2,560,000 respectively. Other faction members only paid the 550,000 each in dues. Incidentally, 4,000,000 – 550,000 = 3,450,000 covers about 5% of the annual costs incurred by an LDP Diet member running a very tight ship.

** The Social Democrats have their own issues regarding labor unions. Besides, they want to hitch a ride on the DPJ bandwagon.

*** Governor Ishihara is campaigning hard for the Tokyo LDP. I think it means that his two political sons will not be breaking out of the national LDP any time soon.

Monday, July 06, 2009

Nakasone, LDP Elders, etc., etc…

My dialogue with Mark the Techie continues:

Why do you like Nakasone? And what do you think of his son, Hirofumi?

The elder Nakasone had—still has—a clear vision of his objectives as a statesman and held to it as best he could throughout his political life. For him, the political game was secondary. He understood the need to set his priorities accordingly, as can be seen from his handling of the Yasukuni controversy. He matched this purposeful approach with an eloquence that is sorely missing otherwise from post-WW II politics in Japan. He also put his personal stamp on administrative reform. He was a worthy representative of the LDP at the high watermark of the 1955 regime. His son appears to be an amicable, inoffensive representative of the more conservative elements of the LDP, nothing more, nothing less. He’s the son of a Prime Minister, yet has spent all his political life in the Upper House; go figure. I’d love to have him as a neighbor though.

In your original post, you seem to discount the power of the faction heads. But in your first reply, you claim that many younger politicians obey their elders. Who are these elders that have control of the younger politicians?

I haven’t done a good job of explaining myself, have I? Let me take another crack at this theme.

I am sorely disappointed with the genteel fifty-somethings who have failed to step up in the post-Koizumi years and instead allowed their elders to play the political game with the Prime Minister’s chair and senior party posts. (Remember that the generally untested Abe essentially had the Prime Minister’s job dropped in his lap by Koizumi.) Don’t they understand that politics is a blood sport? Yoshimi Watanabe id leave the LDP, but his new movement (with Kenji Eda) is unlikely to emerge as significant focal point in any post-electoral search for realignment. Pockets of youthful dissidence do flare up as the party leadership lurches from one crisis to another, but ultimately come to naught as their elders preach unity, leaving the impression of aimlessness and disarray in the face of pending disaster. The junior varsity for the opposition has an excuse; Ozawa, Hatoyama, and Kan are, after all, the founding fathers of the DPJ and its predecessors. Besides, Okada and—even more significantly—Maehara have taken their turns.

Faction heads and their deputies are not totally powerless, insofar as parliamentarians continue to see value in their faction membership. But Yoshiro Mori appears to maintain substantial influence over his faction although it has been some years since he yielded formal leadership. Within the same faction and possibly beyond, Yoshinao Nakagawa has emerged as a focal point for diehard reformists, precipitating a bitter intra-faction schism.

By the way, I find it curious that you separate foreign policy from economic policy. Based on the success of Japan during the post war period, I'd say a successful economic policy is the most integral part of a successful foreign policy. After the Iraq war, and after nearly a decade of a botched reconstruction effort in Afghanistan, it seems funny for an ex-MITI bureaucrat to split foreign policy and economic policy like that.

If your point is that a strong domestic economy is essential to achieving ambitious foreign policy goals, I can’t agree with you more.

Globalization? Is that what it's called? Interesting. But for the West, I think another word is more applicable. I think it's called de-globalization. Think of Gordon Brown and his "British jobs for British workers" spiel. Or think of Sarkozy and his admonition against exporting jobs to eastern Europe. Or think of the Buy American provision. But most importantly, think of GE. Nearly three decades ago, Jack Welch unleashed his shareholder value ideology. Good for shareholders. Not good for the current account. About a week ago, Jeff Immelt said the U.S. had outsourced too much, and needed to have a stronger manufacturing base. Quite a difference, wouldn't you say?

The economic downturn has created a backlash. Let’s see what happens other than Buy American provisions in Obama’s economic package (which the other OECD member countries are opposing) that goes beyond rhetoric. For example, will Sarkozy propose limitations on the free movement of labor and capital within the EU? Suspend Poland’s membership?

I'm sure Japan's continued support for the IMF gives some relief to the U.S. and Europe, but I would note that since the crisis began, it seems like Japan has been most active through the institutions it controls - the ADB, JBIC, etc.
Japan was the first to extend a substantial amount of money to the IMF during the current crisis. JBIC is basically the lender of last resorts for Japanese exports and foreign investment. It’s going into action as part of the government-sponsored emergency financing efforts. Nothing unusual in that. I don’t know what we’re doing with regard to ADB right now, but I doubt there’s anything new there as well.

I don't know what happened in Australia for most of the 20th century and I don't really see why Australia's switch to the Asian Football Federation is particularly important. On the other hand, I would note that Kevin Rudd seems to be a big advocate for this Asia-Pacific thingy. I wonder why? Also, I believe his budget calls for buying lots of military equipment for defense against China. Presumably, he will buy this equipment from the U.S. In addition, Australia continues to pester Japan on whaling. Furthermore, it recently killed the Rio Tinto deal with Chinalco. Throughout that process, I heard many voices in Australia who expressed concern about Chinese investment. Frankly, his recent actions have made me wonder if Kevin Rudd's professed affection for China was more a stunt to attempt to panic Japan - a stunt that backfired because Japan itself wants to get closer to China.

In 1972 Gough Whitlam came to power and started the process that transformed Australia, which till then had drawn a neat racial parallel with the far more malignant regime in South Africa. Essentially, White Australia decided to become Asia(-Pacific) Australia. Australia’s switch to the Asian Football Federation is a cultural symbol of this transformation.

As for relations with China, remember that when Rudd came to power, China was still the new black. I don’t think it had anything to do with Japan, a mature market as far as Australia’s natural resources and agricultural industry were concerned. But it’s easy to get worked up over natural resources when they’re still in the ground. I think that’s silly—unlike factories, no one can dismantle a mine and cart it off out of your national jurisdiction—but that’s the way the world works. In any case, China national champions and state investment vehicles, unlike say Norwegian or Qatar sovereign wealth funds, are more likely to follow the dictates of non-commercial interests. Connect this to the not unrelated authoritarian nature of China’s political regime and more or less inchoate fears about rising Chinese dominance, and I can understand where the public outcry was coming from.

I don’t know what exactly triggered the perceived shift in Australia’s defense posture. Maybe the strategic implications of a growing Chinese blue-water navy pushed the Australia’s national security establishment past the tipping point. I happen to think that the threat is greatly overestimated, but I can see how things might look quite different from a Southeast Asia/South Pacific perspective. I’ll believe it when I see an Australian aircraft carrier.

The “research” whaling issue, if I understand it correctly, addressed a highly emotive concern of a particular Labor Party constituency. I believe that the Rudd administration has become considerably more subdued since the kangaroo slaughter controversy—total nonsense in my view, but I don’t have a vote on this.

I agree that the U.S. is becoming less white, though I think the financial crisis could alter that trend somewhat. You say this will have powerful cultural and social implications. What are they? What changes will result? I am very interested in hearing what you have to say on this issue.

Note that I wrote in the present tense. There’s a natural progression from blackface vaudeville routines to the Jack Benny Show to I Spy to Eddie Murphy. Then there’s the greatly expanded role of Hispanics in pop music. These are just a couple of examples of profound changes in U.S. popular culture. (And what high culture exists that was once not popular?) Social change: public acceptance of mixed race couples. Basically, cultural and social barriers of all sorts are coming down in a browning of America.

Since America is by far the greatest post-WW II exporter of cultural and social constructs, this change affects the rest of the world—a world where Al Qaeda uses rap video to recruit terrorists. In a thousand years, unless humanity fcuks up royally (there’s a not insignificant chance of that happening), they’ll all be subscribing to variations of a global culture using variations of a language vaguely resembling English—and it’ll be America’s fault.

Sunday, July 05, 2009

“If Paul Krugman Were a Woman He would be Noriko Hama”?

Um, no. Seriously, Daniel Gross doing Japan has shaken my trust in that webzine to its foundations. It’s everything journalism should not be.

Take 1: McSushi: Why is American Food So Popular in Japan?

The image of Japan as being inhospitable to imports is old, enduring, and not entirely unjustified. The government is offering immigrants from South America—many themselves descendants of Japanese emigrants—$3,000 to return home (the better to free up jobs for native-born Japanese).

The charge that “Japan as being inhospitable to imports is old, enduring, and not entirely unjustified” is not entirely unjustified. But then, choose your examples carefully and you can make similar charges against any country. More to the point, does the $3,000 one-off payment back up Gross’s claim?

Why does Gross suppose that a South American immigrant would give up his Japanese job for a paltry $3,000? In fact, unemployed Latin American immigrants—actually, any Japanese emigrants, their spouses, children and grandchildren—can receive unemployment benefits or go on welfare, just like Japanese citizens in the same situation. The immigrants do not have to take the $3,000 (and the money for their dependants) and go back home; they have a choice. This is all a complicated issue, and I’m not arguing that the Japanese authorities, the Japanese education system and other elements of Japanese society couldn’t have done a better job with these immigrants in the first place. But that’s another story. Gross obviously does not understand any of this and made no effort to do so. His only interest is in using this example to set his readers up for a riff on American food in Japan.

The vista that meets visitors at Narita Airport is hardly more welcoming: masked staffers, health disclosure forms, and a sign warning that people who are coming in from countries such as Bolivia and Brazil must go in a special line. (They're looking for either soccer players or swine flu.)

First and foremost, this is a good example of American ignorance about soccer. Ko Ishikawa, a small and slender but skilled defender, to the best of my knowledge has been the only Bolivian soccer player that has played in the J-League in its 17-year history. Which makes Gross’s gag work only for people who have bought into American stereotypes about those Latinos. So what was the purpose of the “special line”? Didn’t Gross bother to ask? Isn’t that what he’s getting paid to do? Bolivia and Brazil have never been known as hotbeds of “swine flu.” What’s going on here? It does appear to be some sort of quarantine measure. What’s the global standard? Most important to the article, what does this have to do with “being inhospitable to imports”?

But Japan—Tokyo, at least—isn't uniformly hostile to imports. Though fiercely proud of its many cuisines, Japan is surprisingly open to food-related businesses from overseas.

Let me put it this way, Gross must be the only one I know who is surprised. I don’t expect him to actually know that we used to say in the 1960s that the three most popular things with kids were, “Kyojin (baseball team), Taiho (the great half-Russian sumo grand champion), tamago-yaki (fried eggs),” or that the first MacDonald’s opened in the Ginza Mitsukoshi—in its heyday the Japanese cultural equivalent of Saks Fifth Avenue. But tofu, sushi, tempura, in fact, most of what Gross probably thinks as Japanese cuisine are Chinese and European imports with a Japanese twist (or more). Likewise the locally even more popular udon (Chinese), ramen (China) and curry (and) rice (India; Bengali, I think). (Off topic: Teppanyaki is more of an American invention that took a Japanese cooking device and used it in the services of a meat-oriented food culture.) And of course it’s not just food-related businesses, as anyone who’s walked the streets of Ginza, Roppongi, or Omote-sando will know.

An array of recognizable names welcomes visitors to Gaien-Higashi Street: Wolfgang Puck, McDonald's, Outback Steakhouse, the Hard Rock Café (with Hello Kitty playing the guitar in the window). And there's even the ne plus ultra mediocre American cuisine: T.G.I. Friday's. I've traveled about 20 hours and 7,000-odd miles to wind up in a strip mall.

No, Gross hasn’t wound up in a “strip mall.” Cultural transplants take on different, exalted significance away from home. Japanese cuisine is a good example. I’ve often marveled at how all “Japanese” restaurants are expensive where he come from. Would Gross believe that in Japan, a $4 tempura meal complete with miso soup can be quite enjoyable*?

One man’s crap is another man’s cool. Isn’t that the kind of thing that journalists are supposed to look into?

It struck me that while Esperanto may be dead, the language of food may have replaced it as one that transcends borders and can be universally understood.

This guy obviously doesn’t get out much. Or is Washington that awful?<

(The logic of dubbing fried chicken pieces as "shaka shaka chicken" still eludes this gaijin.)

Because he never asks, that’s why. For those of you who are not proficient in colloquial Japanese, shaka shaka is adjectival onomatopoeia for “shaking.” It’s the sound that you make when you shake the pieces in their wrapper to coat them with seasoning. That way, the seasoning will have little time to suck the moisture out of the pieces, or so I assume. And, of course, nowhere in the article does he find a way to justify the “McSushi” in his title—too bad he failed to notice the many kaiten zushi. restaurants, a McSushi if ever there was one. (It would have taken this article in a totally different direction.)

Oh, and he never tries to answer the question in the title. Maybe it’s not his fault. But what does that say about the editor?

Take 2: If Paul Krugman Were a Woman

Both Paul Krugman and Noriko Hamada are economists. Both Krugman and Hamada have published many books for the general public. Both appear in the mainstream media on occasion. But there the resemblance ends. And everything Hamada says about the Japanese economy is part of the conventional wisdom. As for her prescription, it is a “gross” understatement to say that she is “not as sure-footed when it comes to a cure.” In fact, he makes her come across as some kind of buffoon. Is that why he, as a Slate writer, compares her to Krugman, ideologically closer to Salon? Luckily for Gross, this is basically a summary of an interview, so he doesn’t have as many chances to make a fool of himself.

* It’s a mystery to me too, since they have to dip the tempura in the batter and fry it on the spot. No microwave oven in sight, it’s more diner than fast food restaurant, if you know what I mean.

Saturday, July 04, 2009

Of Rabbit Hutches and Love Hotels? Oh the Cultural Clichés…

This CNN reporter thinks that “[l]ove hotels fill a need for privacy in a country where high population density often means couples have little time alone.” Actually, this reminds me of a story about urban, daylight, car sex in Italy. I think they both have a lot less to do with high population density and a lot more to do with young adults living with their parents. I mean, where are the love hotels in Manhattan?

What do you think? And is there an American connection between adultery and suburban motels? Or Argentine cruises?

And what the heck does the CNN desk mean by “Love Hotel business Zooms”? What are the revenue figures?

WSJ Missing the Point on Ambassador Roos

Here. I guess we should be disappointed we’re not being treated like Iraq and Afghanistan. Ahem.

A Closer Look at Hatoyama’s Political Finances

Anyone who wants to know more about Yukio Hatoyama’s personal political finances can look at the FY 2007 Yuai Seikei Konwa-Kai report as most recently corrected* You don’t have to be a Sankei Shinmun sympathizer to suspect that some donations from “individuals” that actually came from Hatoyama’s coffers remain uncorrected. (The rest of eh media does not appear to have reached that point yet, though even the liberal-leftish Chunichi Shinbun** isn’t accepting Hatoyama’s story.

Neither appealing to governance issues—the DPJ is the opposition—nor raising leadership questions—three words: Abe, Fukuda, and Aso—will turn the tide for the LDP, but nailing yet another DPJ leader for political financing irregularities once again just might cause enough floater voters to stay away from the ballot box or write in non-DPJ protest parties to keep the LDP-Komeito coalition in power. Thus, the best-case scenario for the LDP will be a half-hearted attempt by Hatoyama to hang tough, while grumbling within the DPJ remains low enough to allow him to keep his job—mirroring what is likely to be the situation in the LDP barring an unambiguous DPJ victory in the Tokyo Prefectural Assembly election on 12 July.

Hatoyama, of course, can stanch the bleeding by disclosing the list of under-50,000 yen donors or handing it over to a team of independent legal and accounting experts for a thorough check and showing that the under-50,000 donations were on the level. I believe that there will be increasing pressure from the media for him to do this.

Some details on the numbers follow for the truly interested.

Hatoyama’s FY2007 political finances as corrected now show that he received 49,926,000 yen in donations from individuals, Of the 21,860,000 yen in donations—two-fifths of the total—coming from the sixteen named donors, there were two donations totaling 9,000,000 yen from Hatoyama himself, eight 1,500,000 yen donations from eight donors including one from his Bridgestone heiress mother, two 1860,000 yen donations from one donor, two 100,000 yen donations, one 50,000 yen donation, and one 15,000 yen donation and one 10,000 yen donation—note that the name of the donor in each case did not require reporting. In other words, he and his mother accounted for almost half of the 50,000 yen-and-up donations. The 5,220,000 yen that Hatoyama now claims as a personal loan*** also deserves a close look. There are forty-eight such “donations”, one of which accounted for 500,000 yen. The rest mostly fell between 50,000-200,000 yen, with one each at 20,000 and 10,000 yen—amounts that did not require reporting. The last point in particular indicates that there may be more under-50,000 anonymous donors—accounting for 27,791,000 yen or three-fifths of the total—whose donations actually came out of Hatoyama’s political bank account controlled by the aide in question.

Incidentally, I have nothing against people spending as much of their own money as they want to get elected. As long as everything’s on the up and up, I’m cool with that; the electorate seems to have a way of separating the Bloombergs from the Forbeses. Ans if it doesn’t, tough sh!t. That being said, the law is the law, and Hatoyama is no different from me in that he is not allowed to donate more than 10 million yen each year to any personal political finance organization****.

* The Ministry of Internal Affairs and Communications website carries all available political finances reports as PDF files on this sub-portal. Enjoy.

** Although a local newspaper, it prints more copies than Sankei and leapfrogs ahead of Nikkei into fourth place (behind Yomiuri, Asahi, and Mainichi, I that order) if you add Tokyo Shinbun and two other affiliates.

*** This, as I explained in my previous post, is a dubious claim. I believe that it would be disallowed in bankruptcy proceedings.

**** Of course if you lift the ceiling, you also must close the massive gift-tax/inheritance-tax loophole that allows politicians to pass the political organization with its money and all to their heirs tax-free.

Thursday, July 02, 2009

Yukio Hatoyama’s Political Financing Troubles

Reporter: Exactly what kind of correction was made with regard to the political financing report? Since Mr. Hatoyama is already donating 9 million yen annually, if he surpasses 10 million yen [as he obviously will with the additional 21.77 million yen over the last 4 years], he’s over the quantitative limit for personal donations, isn’t he?
Yoichi Ioroi, Esq.: I [as the lawyer employed to conduct a third-party investigation of the matter] will answer that question. With regard to the issue of quantitative limitations, we think that the money should be correctly treated as loans. We made the necessary corrections [in a supplementary report].

30 June press conference by Yukio Hatoyama and the lead lawyer for his investigation
The Hatoyama camp had been using his personal funds in recent years to cover shortfalls in his political financing organization. It came to light when it was revealed that the money had been reported as donations from individuals in the names of Hatoyama friends and acquaintances—without their permission. (Sometimes, the Hatoyama camp had no choice; in a life-imitates-satire version of Gogol’s Dead Souls, some of them were already dead.) As the above excerpt from Hatoyama’s press conference shows, the aide resorted to the ruse because the money would have put Hatoyama over the annual 10 million yen limit for donations by an individual to political organizations other than a political party*. Hatoyama denied any knowledge of the cover-up and blamed it on a top aide, who allegedly had been diverting funds entrusted to him to cover expenditures that should properly be attributed to Hatoyama personally and putting the money into Hatoyama’s political financed management organization. In the press conference, Hatoyama offered the conjecture that the aide may have resorted to such extraordinary measures because the latter had been too embarrassed to admit that he had not been able to secure enough individual donations in recent years. Hatoyama accepted responsibility and promised to clean up his operation. With this, Hatoyama wishes to move on; I suspect the legal problems have only begun.

Post facto corrections to the annual reports that political financing organizations file with the authorities are fairly commonplace. But can the underlying facts themselves be corrected, i.e. transform what could very well have been straightforward donations into loans? After all, the lawyer responsible for the investigation admitted in the press conference that the aide had no idea of using “loans” as a legal (and therefore infinitely better) means to circumvent the 10 million yen ceiling. In other words, it is at least plausible that the aide, being at both ends of the transactions as Hatoyama’s agent (by way of power-of-attorney over a Hatoyama bank account) and an employee of Hatoyama’s political finance organization, had intended to irrecoverably transfer said funds from the former to the latter.

If that is indeed the case, the aide maybe charged with two separate infractions as an employee of a political finance organization: A) making a false entry in a report , which is punishable under Article 25, paragraph 1, item (iii) by imprisonment of not more than 5 years and/or fine of not more than 1 million yen; and B) receiving a donation in violation of the 10 million yen ceiling, which is punishable under Article 26, item (i), by imprisonment of not more than 1 year and/or fine of not more than 500,000 yen. The excess donation is subject to forfeiture under Article 28-2. Theoretically, Hatoyama himself could be held charged with two separate infractions: C) as head of the political finance organization, negligence in appointing and supervising the CFO, which is punishable by a fine of not more than 500,000 yen (Article 25, paragraph 1); and D) making a donation in violation of the 10 million yen ceiling, which is punishable by imprisonment of not more than 1 year and/or fine of not more than 500,000 yen (Article 26, item (i)).

It’s hard to believe that the aide will not go down for A). Recasting the donation as a loan appears designed to avoid B), but that’s difficult to do when it is revealed Hatoyama’s agent—the aide—had nothing of the sort in mind at the time. Thus, I think that the lawyer’s admission during the press conference was a tactical error from a legal viewpoint, though understandable from a political perspective. If the aide goes down for B), forfeiture ensues. I have no particular views about C), though at least one former public prosecutor has repeatedly stated in public that this particular negligence clause is near-impossible to invoke and I have no reason to doubt that. I am even more doubtful about the possibilities of the Public Prosecutors Office charging Hatoyama with D), since the aide’s story and Hatoyama’s denial of any knowledge ring true to me**. In any case, you can be sure that the PPO is is the last of all institutions to overlook these possibilities.

In conclusion, as far as indictments are concerned, the yen will stop at the aide. However, recasting the donation as loans is likely to put the Hatoyama camp at odds with the PPO, with the case dragging out publicly over the coming months, possibly years, in a legal dispute over B)—instead of a quick guilty plea by the aide and a suspended sentence, plus forfeiture of the excess money. In the process, further attention will be drawn to Hatoyama’s “personal” fund—a substantial sum by his own admission—and its real purpose, seeing as it has been controlled by the same aide.

* Actually, it’s a little more complicated than that, but this is close enough for our purposes here.
** Article 21-3, paragraph 3, bans personal donations over 10 million yen while Article 26, item (i) defines its criminality. They do not appear to have taken a case like this, where an agent makes the offending donations without the principal’s knowledge. There’s a chance that the PPO may try to push the envelope on this one and charge the aide at both ends of the donations.

Wednesday, July 01, 2009

The Prime Minister Appoints Two New Ministers and the Nation Yawns

Yoshimasa Hayashi and Motoo Hayashi joined the Fukuda administration on 2 August 2008 as Minister of Defense and Director-General of the National Public Safety Commission respectively. Sadly, they had to give up their cabinet post seven weeks later when Yasuo Fukuda abruptly resigned as Prime Minister, opening the way for the more campaign-ready (or so they thought) Taro Aso to take up the mantle and call an early snap election. (We all know how that scenario turned out.) Now, as his grandiose plans for a wholesale overhaul of his administration and party leadership has, like so many of his political initiatives, fizzle out, Aso is satisfying himself with appointing Y. Hayashi to take up the Economic and Fiscal Minister’s portfolio while M. Hayashi is being tapped to assume his old NPSA post.

The logic behind Y. Hayashi’s appointment is sound, since Kaoru Yosano had been doing triple duty in charge of the heavy-duty Finance Ministry, financial regulation, and economic and fiscal portfolios. Moreover, Y. Hayashi, though a 4th-generation heirloom turkey, happens to be an accomplished policy wonk in his own right. The NPSC job, though, needs little more than a warm fanny to fill the minister’s chair. Taking it away from the Internal Affairs and Communications Minister does little to ease his not inconsiderable burdens.

I guess the two Hayashis can at least claim that they did manage to grab a chair each when the music stopped. And Aso’s soul can rest easy, having expiated its sins for abruptly terminating the cabinet tenures of these two men to ultimately no political use as the Prime Minister frittered away political capital that he should have devoted to an early snap election.

I think there are some legal complications to Yukio Hatoyama’s financial contributions to his own political finance organization that are not being discussed in the mainstream media yet. The Public Prosecutors Office can give him a hard time with this, I think. I hope to write about that and what that means politically (and respond to recent comments on my posts) after I sober up—sometime tomorrow, I think.