Commentary by William Pesek
March 4 (Bloomberg) -- The most cynical moment in recent Japanese politics featured the nation’s top reformer.
It was in September, when Junichiro Koizumi announced his retirement from politics. As prime minister from 2001 to 2006, he took on the corporate establishment, shook up the economy and called for new politics.
Then Koizumi got to the real point of the heavily attended press conference: Oh, here’s my son, Shinjiro Koizumi, who should succeed me in the job.
It was a numbing moment for observers who once saw Koizumi as the change agent that the second-biggest economy desperately needs. It was a stark reminder that even those supposedly committed to improving Japan’s situation treat the government like a mom-and-pop shop.
Parents owning fruit stands, shoe factories or trading firms often hope to pass the torch to their kids. They don’t call it a “family business” for nothing. What happens, though, when politicians treat their country the same way?
Since Koizumi left the top job in September 2006, Japan has had three prime ministers, none of them remotely up to the task. Stress did in Shinzo Abe (September 2006-September 2007), political gridlock sank Yasuo Fukuda (September 2007-September 2008) and widespread voter dissatisfaction will soon nudge Taro Aso from power. And not a second too soon.
Family Dynasties
Other than a knack for botching the job, Abe, Fukuda and Aso have something important in common: They are part of family dynasties.
It’s a key characteristic of Japan’s history, from the emperor’s 1,400-year lineage to the father-son inheritance of Kabuki theater roles. The Cabinet chosen by Aso, the grandson of one ex-prime minister and the son-in-law of another, fits a similar pattern.
Among Aso’s original lineup were descendents of former lawmakers for 11 of 17 positions. That beat Fukuda’s eight such appointments. Even Koizumi, who in 2005 used outsider candidates to win 68 percent of lower house seats, turned around and gave nine Cabinet posts to legislators’ relatives.
The penchant for recycling family members is holding Japan back at a time when it needs to be planning for the future. Nothing short of a political earthquake will alter this dynamic.
Japan’s obsession with seniority doesn’t help. A lawmaker doesn’t matter until they rise through the ranks decade after decade. Once true power is granted, that politician has been co- opted by a system that serves itself, not the people.
Seniority Rules
Seniority matters everywhere. Yet the idea of a 47-year-old junior lawmaker akin to U.S. President Barack Obama becoming Japan’s prime minister is unthinkable. Perhaps it’s possible when that smart, articulate Japanese Obama is 67.
Not that Obama is sure to succeed, yet Japan doesn’t have 20 years to wait for a fresh-faced leader who might think differently from the status quo. Its massive public-debt load, fast-aging population, shaky pension system and waning competitiveness can’t wait that long.
A fast-deepening recession raises the stakes. Even the vaunted Toyota Motor Corp. is seeking government loans. The government plans to tap its foreign-exchange reserves to help a state-run bank increase loans to companies operating abroad.
Japan has formidable problems and its leaders are in over their heads. Aso’s focus isn’t the economy, but keeping his party in power. Kaoru Yosano, Japan’s new finance minister, is in damage-control mode, not looking-five-years-ahead mode.
Clean-Up Job
Yosano’s job isn’t an easy one. He must clean up after his predecessor’s embarrassing and job-ending performance in Rome last month. Shoichi Nakagawa’s claim that he wasn’t drunk at a Group of Seven press conference didn’t pass muster.
Rather than grasping at new ideas, Yosano is opening Japan’s tired playbook. He ordered a study into ways to bolster stocks with government funds. It’s better to do the opposite: implement sound policies that cheer investors.
The Liberal Democratic Party’s focus on bloodline over talent and competence helps explain why Japan is where it is today. The party that has run the nation for all but 10 months since 1955 is devoid of vision.
Sankei newspaper polled voters soon after Aso became prime minister in September. Fifty-eight percent agreed “it’s a problem” that prime ministers are descendents of former lawmakers. The opposition Democratic Party of Japan is considering a ban on family members inheriting campaign funds to discourage dynasties.
We Are Family
Family politics aren’t unique. Look no further than the Bushes of the U.S., the Gandhis of India, the Kirchners of Argentina, the Bhuttos of Pakistan, the Macapagals of the Philippines and the Sukarnos of Indonesia.
Japan’s we-are-family governing system has a counterpart in the private sector known as “amakudari.” Literally translated as “descent from heaven,” the practice hands out executive posts to former public officials. In other words, you scratch my back when you’re in government, I’ll scratch yours with a cushy job when you’re ready.
The corruption that amakudari engenders is one reason it took Japan’s banks so long to come clean on the magnitude of their bad loans in the 1990s. It also explains why government policies are skewed toward huge, politically connected companies, not startups that might reinvigorate the economy.
Picking leaders based on merit would pay great dividends in Japan. Instead, it’s all about who your mom and dad are.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
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