I've wanted to do a post about the recent elections and the very different debates occurring on economic policy in Japan. The more conservative of the two main parties, the Liberal Democratic Party, recently regained power. They are advocating for more short-term stimulus spending and pressure on the Bank of Japan for unlimited quantitative easing to boost inflation and weaken the yen. Neither option seems very conservative from an American perspective, but it is inaccurate to view Japanese politics through an American Republican versus Democratic lens.
Fortunately, the Washington Post Wonkblog put together a handy story on these topics. It's a decent overview, if you are interested.
The budget plans are interesting to me, since that's part of what I am being paid to learn. Here's the relevant text:
"Details are sparse at this point, but we know that the plan will total ¥10.3 trillion, or $116 billion, not including local and private-sector contributions, which bring the total to ¥20.2 trillion, or $227 billion. The federal measures include ¥3.8 trillion ($43 billion) for disaster relief as part of the ongoing earthquake/Fukushima recovery, ¥3.1 trillion ($34.7 billion) for child care, medical care and aid to local areas, and ¥100 billion ($1.13 billion) in increased defense spending."
In 2009, the Japanese public threw the bums out and gave the Democratic Party of Japan (DPJ) a shot at governance. This past December, they threw the DPJ bums out and the LDP took over the lower chamber and, therefore, the prime minister's office. Now PM Abe is looking ahead to the upper chamber elections this coming summer and hopes to regain power there.
The LDP is more hawkish on military issues than the DPJ, and I'm not quite sure where Japanese public opinion is on that issue, especially in light of recent tensions with China. But they are really fed up with two decades of poor economic performance, a not very rosy future outlook, and the DPJ's poor performance at the helm. On the other hand, they don't seem very enthusiastic about the LDP either.
I'm not an economist, but my view is that Abe's policies will juice the economy enough between now and summer to win the upper chamber. On the other hand, these seem to be short-term cyclical solutions to Japan's long-term structural problems. Both of these policies can, and very likely will, have short-term positive effects, but at some point Japan has to address its long-term challenges. Sound like a familiar story?