Let's Stop Japan's Revolving Door
Japan has given new meaning to the moniker "Group of Seven." Last week, the phrase merely referred to the seven largest industrialized economies. Now, it's also an allusion to the number of Japanese leaders in just six years.
Sunday's election win by the Liberal Democratic Party means Shinzo Abe is likely to round out Japan's own G-7; he'll be named prime minister as soon as next week. Here's another worrisome metric: Japan is about to name its 10th finance minister since the "Lehman Shock" of 2008, something that's a bit shocking all its own. Japan, you see, has its own Group of 10, too.
The revolving-door nature of Japan's politics inspires even less confidence in international markets than it does at home. It's a key reason why big economic-policy shifts elude a nation badly in need of them. Leaders spend so much time trying to keep their jobs that they have little time to actually do them. Japan should try an experiment: Give Abe a period of time, say two years, to articulate a vision and implement it.
Japan's politics have become too much about the fortunes of the party in power and not enough about the nation's 126 million people. They're too much about petty squabbling and rhetoric, not enough about legislating change.
Some will counter that the U.S. has a similar challenge with polarized politics, but that's not so. For all the gridlock, filibustering and constant campaigning in Washington, a U.S. leader has four years to work with. Japan's leaders spend every moment of the roughly 12 months each is getting nowadays trying to cling to the job. That leaves little time for thinking new thoughts, negotiating for progress or amassing the political capital needed to alter a huge economy's trajectory.
There's ample reason to worry Abe won't succeed. His first stint as prime minister (2006-2007) was a flop. And his stated policies to revive things this time around -- more fiscal stimulus and additional easing by the Bank of Japan (8301) -- lack creativity. Both have been tried ad nauseam and with no success for 20 years now. Abe is a nationalist who may do even more damage to Tokyo's $340 billion trade relationship with Beijing. Today's rally in Tokyo Electric Power Co. (9501) shares shows markets fully expect Abe to reopen nuclear reactors closed after last year's huge earthquake and tsunami, something most Japanese are against. Who knows, Abe might not even last a year.
Still, it's time to give leaders a fighting chance. Japan's to-do list is daunting: learning to grow without adding to the world's largest public debt; weaning companies off zero interest rates; preparing for a demographic change that has adult diapers outselling those for babies; upping global competitiveness; raising productivity; tweaking immigration policies to support a shrinking labor pool; encouraging more startups to create fresh jobs; and tackling the corporate-governance scheme that produced Olympus Corp.'s massive accounting fraud and Tepco's incompetence on nuclear safety.
Fixing any of these problems amid a risk-adverse political system and a change-resistant electorate is a Herculean task in the best of times. Having, at best, 12 months to address them in a chaotic global environment dooms Japan's G-7 to failure.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)
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