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Political Reform Reconsidered

Satoshi Machidori · 2023

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About this book

Author
Satoshi Machidori
Language
English
Published
2023
Length
97,345 words · about 6 h 49 min
Sections
11 reader sections
Text
Digital text
Rights
CC BY-NC-ND 4.0 · repository export licence (OAPEN)

 

Contents (11)

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Front matter

Satoshi Machidori

Political Reform Reconsidered

The Trajectory of a Transformed Japanese State

Preface to the English Edition

Political reform has been a focal point of Japanese politics since the late 1980s. Its target included many institutions, covering almost all the public spheres. It comprehensively transformed and continues to reform the Japanese polity. While institutional changes were almost complete by the early 2000s, they do not become the past. Currently we see their results and effects in daily political processes. For example, we find words such as “prime ministerial rule (shusho shihai)' and "prime minister's office leadership (Kantei shudo)" in many forms of news coverage today. Such terms were seldom used for the description and analysis of policymaking processes in postwar Japan before the 1990s.

It should be noted that many industrialized countries tackled comprehensive reforms of political institutions between the late 1980s and early 2000s. France shortened the presidential tenure by constitutional reform in 2002 to prevent cohabitation, a salient political phenomenon in the 1980s and the 1990s. Italy introduced a new rule for the lower house election, which was a mixed (parallel) system of the single-member district one and proportional representation (SMD-PR) in 1994, in order to establish a more competitive relationship between two major parties or party alliances. A similar electoral system was also adopted in New Zealand in 1996, which was aimed rather at having more diverse parties in legislature. There was clearly a major trend towards changing electoral rules as well as the roles and tenures of the chief executives. We can easily add more cases such as Korea and Taiwan on the list.

Accordingly, political reforms in Japan should be understood not only in the context of postwar Japanese history with its changing socioeconomic and international environment, but also in connection with the trend shared by other industrialized nations. While this book does concern itself with the continuities and discontinuities from the pre-reform Japanese politics, relying, as it does, largely on works in Japanese, it is always conscious of the connection with theoretical frameworks for analyzing political reforms in the industrialized countries.

vi Preface to the English Edition

It means this book can be regarded as a case study of comparative politics as well as a part of Japanese studies. Since it is not possible to mention the relationship with works other than those on Japanese politics in the main text, a brief discussion with reference to other important works is given below.

As regards analytical frameworks, this book is partially affected by the concept of “tide of reform” as advocated by Paul C. Light to understand American politics, which emphasizes the roles of general and comprehensive trends in institutional reforms. Also, certain works on American political development informed my understanding of the nature of comprehensive political change. For example, Eric Schickler’s work Disjointed Pluralism shows that the intercurrence of multiple reforms is a major source of unexpected results in politics. The works of Samuel P. Huntington, Stephen D. Krasner, and Stephen Skowronek show that comprehensive political reforms come after relatively stable eras."

Although inspired by these major works and their contemporary successors, the analysis of this book should not be understood as just an application of these frameworks to the Japanese case. This is because political reform is seen in this book as a product of the rational and purposive behavior of related actors. Works mentioned above, generally categorized as the historical institutionalist approach, often emphasize unexpected results from accidental intercurrences and mixtures of things. Actors are largely constrained by a long-lasting historical context.

In contrast to these views, this book focuses rather on the process in which intentional reform in each part led to transformed yet disharmonized work in the current Japanese polity. What should be questioned is not how actors were restrained by historical contexts and legacies but why and how rational (and often wise enough) actors led to a combination of expected results in each part and uncoordinated outcomes as a whole. To put it another way, this kind of understanding may be closer to Aoki Masahiko's idea that each institution is rational while viewing it as a bundle.*

Analyzing actors’ rational behavior and choices, this book deals with how and why comprehensive institutional reforms were sequentially conducted for approximately 15 years. Readers interested in contemporary Japanese politics and Japanese studies, and who are familiar with the many stories related to political reform, might think that there have been enough analyses on this matter. This book will show, however, that the existing arguments only provide a partial explanation.

We do indeed have many books and articles dealing with the Japanese political reform. They are often referenced in the text. However, in some works, the focus is limited to only one or two areas, such as electoral and administrative reform, in order

?Schickler (2001).

3 Huntington (1981), Krasner (1984), Skowronek (1993). 4 Aoki (2001).

Preface to the English Edition vii to offer the most persuasive analysis of these subjects. As a result, they do not deal adequately with the comprehensiveness of political reform and the linkage among areas. It is unclear, in particular, how reforms of the central government interrelated with those of other areas. Others regard political reform and its comprehensiveness as the result of a big political “boom” or "fever," which is sustained for only a short period of time. In reality, unlike the connotations of words like boom or fever, institutional reforms were sequentially conducted for longer than a decade. While it was not an exceptionally long time given the comprehensiveness of the political reform, boom or fever does not provide a proper frame to understand the whole picture.

Since the publication of the original Japanese edition in May 2020, some notable events have happened. The most significant one was the Covid-19 pandemic. Definitely Japan suffered much, although the total number of deaths was far fewer than many other industrialized countries. The pandemic showed that the supply of medical resources and coordination among multilevels of governments had serious weaknesses in the face of an unexpected emergency. These were at least partially the results of the political reform dealt with in this book. Another weakness exposed in tackling the pandemic was the negative effects and limitations of initiatives from the prime minister's office (Kantei). The Kantei did not depend enough on scientific expertise nor did it listen to the opinions of local governments in its policymaking, particularly in its early phase.?

After the Prime Minister Abe Shinzo resigned due to his illness in August 2020, the successor Suga Yoshihide was unable to successfully solve these problems. The Tokyo Olympic games were held in July 2021, after postponement in 2020, in the midst of the skyrocketing Covid-19 infections and strong opposition from the general public. Many criticisms were directed at Suga's political style, based on the dominance of the prime minister. It could be argued that his resignation in September 2021 was partially a consequence of the furor over the Olympics. As a reaction, Prime Minister Kishida Fumio, concerned about his approval rating in the polls, emphasizes his willingness to listen to the voices of the general public. It reminds us of the catchphrase "tolerance and patience" advocated by Ikeda Hayato, the prime minister just after the revision of the U.S.-Japan Security Treaty in 1960 and set the stage for high-speed economic growth.

However, it is questionable whether Kishida can continue his passive leadership style if he wants to keep his position for the next 3 or 4 years. Even with strong criticisms against the overdominance of the prime minister, it will be no fundamental changes of policymaking processes and styles that political reform has formed because they seem to be more reasonable for many actors. Socioeconomic and international environments will request strong leadership style, as Kishida diplomatically showed after the Russian invasion of Ukraine in early 2022. Trade-offs between maintaining social security and pursuing fiscal discipline will restrict the

5 As for the response of the Japanese government, see Takenaka (2021). ° As to similarity between these two prime ministers, Kishida and Ikeda, see Yoshino (2021).

viii Preface to the English Edition highly distributive policies favored by his administration and the LDP. In this sense, what this book argues is useful not only for knowing the history of political reform but also for understanding the future of Japanese politics.

Satoshi Machidori

Preface to the Original Japanese Edition

What did political reform mean, and what did it achieve?

Interest in political reform intensified rapidly from the late 1980s, and over the next 15 years, institutional reforms related to the public realm were carried out on an extremely wide scale. The “three branches of government” that one learns about in school—the legislature, executive, and judiciary—as well as other institutions, including local administration and the central bank, were fundamentally revised.

As a result, explanations on the basic structures of Japanese politics had to be rewritten for civics modules in middle and high school courses on politics and economics, and for college political science textbooks. Although many people believe these curricular revisions have been slow, the image of Japanese politics presented in introductory political science textbooks is completely different than it was 30 years ago.

Accordingly, the language that the mass media and the public use to speak about politics has also changed. For example, in the past, one often encountered the phrase “bureaucratic rule"—a term that reflected both the excellence and influence of the bureaucracy, and its somewhat arrogant attitude. Even phenomena that were not influenced by bureaucrats were discussed using this term. Today, however, people rarely use “bureaucratic rule" to describe contemporary Japanese politics. Instead, words like “Kantei (prime minister’s office) leadership" or “prime ministerial rule” are more common. Bureaucrats are now preoccupied with divining the will of the Kantei, and they have arguably become bogeymen who are constantly summoned to the Diet by the opposition parties to be condemned for their actions.

How did this change occur? This is the fundamental question this book seeks to address. While the answer may seem self-evident, this book's starting point is that previous commentary and analyses are insufficient.

To be sure, there are many texts dealing with political reform. However, most deal with only specific institutional issues such as electoral or administrative reform. While these may provide persuasive analyses and narratives on a topic-by-topic basis, the interconnectedness of political reform remains under-recognized. For example, it is not uncommon for the rapid spread of political reform to be described ix x Preface to the Original Japanese Edition as a “fad” or a “fever.” However, the period during which political reform was undertaken lasted around 15 years. Institutional changes also occurred over a broad range of domains and on a large scale. In other words, the length and depth of reform initiatives are too great to be dismissed as a mere fad or fever.

Furthermore, it is too facile to view political reform as something that has already happened. It is not unusual to see reform characterized as a symbol of the Heisei era—perhaps, again, because some view political reform as a fad. During the 30 plus years of the former emperor's reign (the Heisei era: 1989—2019), there was much talk of the need for “Reform.” With the ascension of the present emperor (the Reiwa era: 2019-), there exists the view that all the disruptions of political change have passed, and that we should cherish the peace in mind and tranquility of everyday citizens. However, deliberations on political reform began well before the Heisei era, although the actual period of change coincided with it. Nostalgia for the pre-reform periods of high-speed economic growth during the Showa era, particularly in the 1960s and 1970s, possibly contributes to this way of thinking.

It may seem churlish to argue that the public sector and socioeconomics cannot be transformed by a change in imperial reign name, but one cannot dismiss the fact that Japanese politics today is an irreversible consequence of political reforms since the late 1980s. For example, the current system of party politics known as "LDP single-party dominance" (Jiminto ikkyo) looks, at first glance, like the “1955 system" but the LDP's base of support today is completely different from that which existed prior to the 1990s. The LDP (Liberal Democratic Party) under the 1955 system secured long-term success by establishing a solid base of support that extended from parliamentary factions to local politicians, particularly in rural areas. The multi-member district system that was in place during this time also made it difficult to change the balance of power among political parties. However, strong factions and local representative networks have become things of the past, and the LDP today is increasingly dependent on the ad hoc support of fickle urban voters. Under the current electoral system, which is centered on single-member (first-past-the-post) districts, the Democratic Party of Japan (DPJ) grew rapidly from the late 1990s and mounted a serious challenge to the LDP. The DPJ took power for a short time in 2009—2012, showing that if urban voters rebelled—in protest against a policy error or a scandal, for example—even the LDP could lose power. Put simply, political reforms that took place between the 1980s and early 2000s define the present and future of Japanese politics.

If this is the case, the overall picture of political reform must be grasped, not as a fad or event from the past, but as a leading cause of structural changes that will continue to have a major impact on the conduct of Japanese politics. And with so many contemporaneous records and testimonies available, now is the perfect time to undertake a comprehensive examination of political reform. Doing so is the motivation and rationale behind this book.

Satoshi Machidori

Acknowledgments

This is my first book in English, even though my academic career has already spanned 30 years. Indeed, it is necessary for me to express my deep appreciation to many people around the world who have helped me. Unfortunately, however, it might be far beyond book length to refer to all the people and institutions I am indebted to, so I have to limit the names to those directly related to the projects that led to this book.

I had never traveled to a foreign country until my junior year at Kyoto University and was not good at English then (nor am I very proficient now). At the time I decided to enter the graduate school, I did not realize how indispensable languages other than Japanese were for academics. As his first advice to me, Muramatsu Michio, my graduate supervisor, strongly recommended that I actively try to learn English. Without his recommendation, I would not have gone to the United States as a graduate student at the University of Wisconsin-Madison. He has always encouraged me to publish books and articles in English, but I have failed to live up to this expectation.

The starting point of my research on this subject was the "Japan's lost decades" project from 2012 to 2013 at the Asia Pacific Initiative (API) founded by Funabashi Yoichi. The results of my work were published as a book chapter in Examining Japan's Lost Decades edited by Funabashi and Barak Kushner in 2015. Although the schedule was quite tight and my contribution was limited, I found the interactions with the two editors and other project members stimulating.

During the middle phase of research, two presentation opportunities helped me develop my ideas. One was an informal meeting in August 2014 with some political scientists at Harvard whose research focuses were on Japan. Comments from Susan Pharr, Daniel Smith, Naofumi Fujimura, and other participants encouraged me to go forward. Another was my presentation at the annual meeting of the Japanese Political Science Association in October 2014. I thank Tsujinaka Yutaka, the program committee chair of the year, for giving me an opportunity to talk about the whole picture of political reform. In addition to these presentations, my understanding of political reform as constitutional came from a research project for xi xii Acknowledgments comparative constitutional reforms with Komamura Keigo, Asaba Yüki, and other scholars of constitution and political science.

I discovered the Janus character of political reform, that is, the mixture of common idea and its different localization at every reform domain, through a joint research project led by Takii Kazuhiro at the International Research Center for Japanese Studies (Nichibunken) in 2016—2017. Although it dealt with the Japanese “lost decades" again, the Nichibunken project was interested more in fundamental ideas and their continuing effects. Interactions with Andrew Gordon, Uno Shigeki, and other members made me recognize how liberal modernism had mattered and how it had appeared in different forms in various areas of postwar Japanese society.

I had three more opportunities to talk about my ideas at the late phase of writing the Japanese edition of this book in 2018. The first one was the research workshop for political scientists at the Graduate School of Law, Kyoto University. Tatebayashi Masahiko, Soga Kengo, Ken Hijino, and a few graduate students raised questions and gave comments. Such interactions with colleagues are always very significant sources of research development for me. The second was the graduate seminar for comparativists at the Department of Political Science, Keio University. I appreciate Kasuya Yuko and Okayama Hiroshi for inviting me to make a presentation. The final one was the research group for the reform of governing institutions at the PHP Research Institute. I was stimulated by discussions with Kamei Zentaro, Kaneko Masashi, Makihara Izuru, Matsui Koji, Shishido Joji, Sunahara Yosuke, Yamamoto Tatsuhiko, and other participants.

The original Japanese edition was published by Shinchosha with the devoted help of the editor, Takenaka Hiroshi. I am also deeply grateful to Kenneth Mori McElwain and Jonathan Soble who tirelessly advised on this English edition, as well as Mary-Rose Hendrikse, Kawakami Juno, Sakai Kazunari, and all the people related to this English edition, for their assistance. In particular, Tobias Harris, the translator of this book, did really a great job given his deep knowledge of Japanese politics and his excellent professionalism.

The last words should be for my family. My wife Yoko and my three children have emotionally supported me for many years. I dream of them giving this book to their friends overseas someday. I remember that during my childhood my father studied English early every morning by listening to the educational programs on the radio and by listening to cassette tapes. As I approach the age of his premature passing, I finally understand how precious his efforts were. I wish I could have dedicated this book to him directly.

November 2022 Satoshi Machidori

Contents

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Chapter 1 A Perspectives on Political Reform ce 1 The Path to Political Reform

The Bubble as Precursor

When we look back today, the Bubble period of the 1980s and the beginning of the long stagnation of the 1990s are often lumped together. This book will deal exclusively with the 1990s and beyond, but first, let us look at the socioeconomic and international environment of Bubble-era Japan, which was an important harbinger of the necessity for reform.

The term “Bubble” here refers to a phenomenon in which extremely aggressive investment activity akin to speculation, with no direct relationship to real economic activity, is practiced and, as a result, the economy overheats. According to economist Yanagawa Noriyuki, the standard definition in economics is “the phenomenon of asset prices rising or falling in a way that deviates from fundamentals." The genesis of the Bubble was found in the international political economy of the early 1980s. At that time, Japan's trade surplus, which was the result of the expansion of exports during the high-growth period, had led to economic friction with the United States and other countries. Under the Republican administration of Ronald Reagan, who was inaugurated in 1981, the United States adopted a philosophy of “small government" and soon faced an enormous increase in its budget deficit due to large-scale tax cuts, as well as large trade deficits with Japan and other major countries. To rectify this, on September 22, 1985, the Plaza Accord was adopted in order to weaken the dollar against other major currencies. The Plaza is the name of the famous hotel in New York which was the venue for the meeting of G5 finance ministers and central bank governors that produced the agreement. The hope was that if other currencies appreciated relative to the dollar, the dollar-denominated

© Kreab K.K. 2023 1 S. Machidori, Political Reform Reconsidered, https://doi.org/10.1007/978-981-19-9433-3 1 price of other countries’ goods would rise, their exports to America would fall, and the trade imbalance would be fixed.

For Japan, the Plaza Accord brought about rapid yen appreciation and a loss of international competitiveness. Before the accord, in February 1985, one U.S. dollar was worth a substantial Y260. By January 1986, the dollar had crashed to Y200, and by that March it had reached ¥170. Due to the rapid appreciation of the yen—the flip side of a falling dollar—many Japanese export industries, mainly in manufacturing, fell on hard times, and the term "strong-yen recession" (endaka fukyo) was born. The government's ability to respond to the recession with fiscal stimulus was severely limited: under the orders of Doko Toshio, head of the Second Provisional Commission on Administrative Reform (the so-called Second Rincho), a policy of “fiscal reconstruction without tax hikes" (zozei-naki zaisei saiken) had been in place since the early eighties.

It was also necessary to respond to international criticism that Japan's exports were excessive due to insufficient domestic demand. In April 1986, Prime Minister Nakasone Yasuhiro's private advisory body—the Advisory Group on Economic Structural Adjustment for International Coordination (Kokusai Kyocho no tame no Keizai Kozo Chosei Kenkyü-kai)—drafted a report that proposed expanding domestic demand and enacting financial liberalization, among other measures. This report was referred to as the "Maekawa Report," after the advisory group's chairman, former Bank of Japan Governor Maekawa Haruo; although these proposals had been repeatedly made before.?

In response to these developments, the Nakasone administration decided to introduce aggressive monetary easing to achieve economic recovery through domestic demand. Private financial institutions such as major banks (toshi ginko, or “city banks") also had surplus capital, as demand for capital had been falling due to the internationalization of the financing methods used by Japanese companies. In this way, an ample supply of money flowed mainly into the real estate and securities markets, inflating asset prices beyond their real value and triggering a bubble. The "divergence from fundamentals" in the economic definition of a bubble mentioned previously refers to this aspect.

Of course, the Bubble was not entirely unrelated to the boom and bust of the real economy. Although the loss of export competitiveness and the measures adopted to alleviate economic friction with trading partners fueled the offshoring of manufacturing industries, there is no doubt that aggressive investment prompted by monetary easing helped Japan overcome the “strong-yen recession." The resulting boom in the securities market birthed the term “zai-tech” (financial engineering) and the fact is that, from large corporations to pensioners, many organizations and individuals dreamed of making a fortune from their investments. It was in 1986 that NTT (Nippon Telegraph and Telephone), privatized by the Nippon Telegraph and Telephone Public Corporation, was publicly listed, and applications

] The Path to Political Reform 3 from general investors, including individuals, totaled six times the number of shares offered for sale.

Meanwhile, sharply rising real estate prices made it difficult, on the one hand, to realize the “common people’s dream” of purchasing a home in an urban area. On the other hand, the anticipation of rising prices for their real estate holdings led many companies to use property as collateral to borrow more investment capital from financial institutions. In Tokyo, many of the large-scale developments of the present day, such Rinkai-Fukutoshin (Tokyo Waterfront City) or Roppongi Hills, were conceived during this period. The face of the city changed greatly as a result of the Bubble, as did those of other major cities besides Tokyo.

A large number of employees of companies that were enriched by the Bubble enjoyed ample entertainment expenses as well as other perks and benefits. Since generous raises were promised under the lifetime employment system, employees’ families also benefited indirectly. Additionally, these benefits also extended to the areas where they lived. Whatever the reason, if money is abundant and it is circulating, it will provide material well-being to most people in society.

Strengthening Satisfaction with the Status Quo

The Bubble also had the effect of supporting qualitative changes that had begun in Japanese society. After the era of high-speed, double-digit GDP growth ended in the mid-1970s, Kanagawa Governor Nagasu Kazuji first proposed the “Era of Localities,” (Chihd no Jidai), and an expert study group (The Ohira Study Group) convened by Ohira Masayoshi, who served as prime minister from 1978 to 1980, advocated the “Garden City State Concept” (Den-en Toshi Kokka Koso). These developments suggest that some people were beginning to question the centralized and uniform social structures that had been pursued since the opening of the country during the Bakumatsu period, that is, the closing era of Tokugawa government in the 1850s and 1860s, in order to catch up with Europe and the United States.

In education, strict school rules, compulsory hairstyles, and other issues came to be seen as problems in the 1980s, and there was new talk of respect for individuality. Although in hindsight social pressure was still quite strong, social norms regarding dress and behavior gradually relaxed, and in major metropolises the atmosphere became freer. In sum, there was a growing movement to emphasized decentralization over centralization and individuality over uniformity.

Because the Bubble created financial surpluses not only for private companies but also for the public sector, including local governments, this trend was also accelerated in policy terms. In 1988, the Takeshita Noboru administration, under the name of “Hometown Revitalization” (Furusato Sosei), announced it would provide ¥100 million yen grants to each municipality. The fiscal timing seemed appropriate. The central government had been deficit-free since fiscal 1990, and local governments had achieved primary fiscal surpluses as well.? Local governments decided to focus on the construction of cultural facilities and support for local sports. It was during this period that the Japan Soccer League began considering professionalizing its operation, leading to the birth of the J-League in 1993, but the embrace of local boosterism by municipal governments and their cooperation in the development of stadiums was related to the Bubble period and its afterglow. In the early 1990s, soccer was treated as a symbol of the era of freedom and individuality.

For better or worse, Japanese society changed in fundamental ways. Prosperity and freedom contributed to the growth and maturation of local culture. However, the enormous sums of money that flowed into securities and real estate markets led to a large number of loans based on collateral that had virtually no value, and the market gradually acquired a more speculative flavor, with “Gentlemen of the Bubble” (baburu shinshi) making enormous profits in a short period of time and wining and dining members of the financial institutions who were the source of their funds, and regulators. Moral decadence and public anger, as a reaction, gradually became apparent.

However, Japanese society was blanketed in a euphoric satisfaction with the status quo that outweighed any disappointments. Postwar Japan’s high-speed economic growth or, from a longer perspective, catch-up modernization since the opening of the country at the end of the Tokugawa shogunate in the 1850s and 1860s, was achieved by the willingness of elites from the worlds of politics, administration, and finance to adapt to precedents from the developed countries of Europe and the United States, even at a cost to their own self-interest. The consumption tax (analogous to a sales tax), which was successfully introduced in the late 1980s after repeated debate since the late 1970s, is probably the last example of this. However, seen as a whole, Japanese elites had completely lost sight of any ideals by this time, and Japan, which had become a developed country, had grown completely intoxicated by its booming economy. The Liberal Democratic Party (LDP), which dominated politics, had become thoroughly absorbed in pork-barrel politics, which distributed the fruits of economic growth to its support base. The bureaucracy placed so much emphasis on cooperation with LDP administrations that its ability to think about a long-term vision of the state declined. The business community was so overwhelmingly confident in the Japanese style of business that it no longer felt much need for change. And the general electorate was primarily concerned with preserving their affluent lifestyles, and they accepted the elites’ desire for the status quo.

1989 as a Turning Point

The environment surrounding Japan, which had appeared to be smooth sailing, changed dramatically in 1989. In January of that year, the Showa Emperor passed

] The Path to Political Reform 5 away and the era name was replaced by Heisei. The new era began quietly, amid a mood of self-restraint that had prevailed as the Emperor’s condition worsened in the latter half of the previous year, but before long Japan was met with a series of major events at home and abroad.

The first was the widening of the Recruit scandal. The Asahi Shimbun reported on June 18, 1988, that Ezoe Hiromasa, the founder and president of Recruit Co., had transferred unlisted shares in Recruit Cosmos, Recruit’s real estate development subsidiary to an official in Kawasaki City, near Tokyo, which was pursuing a redevelopment plan. The transfer had occurred several years before the report, but since it was early in the Bubble period, Recruit Cosmos’s shares would surely grow in value once it went public, and so the transfer during the pre-listing period was effectively a profit-sharing scheme, or, more simply, something akin to a bribe. If this were all, it would have been nothing more than typical collusion between a real estate company and a local government. This is because Recruit, a rapidly growing company that had started out as a magazine for job seekers, was still a relative newcomer to the real estate industry.

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