Abe needs to get more ambitious, not less.

Photographer: Tomohiro Ohsumi/Bloomberg

Abe Shouldn't Make His Mentor's Mistakes

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If Shinzo Abe wants to be remembered as more than a two-time failure as a Japanese leader, he should learn from the last one to achieve anything big: his political mentor, Junichiro Koizumi.

Yes, I know. Koizimi's five-year premiership ended feebly in 2006. But early on, Koizumi's signature slogan -- "reform without sacred cows" -- made him wildly popular with Japanese tired of years of drift and cronyism in Tokyo. In speeches and blog posts, Koizumi urged voters to pressure his own Liberal Democratic Party to support change. With public opinion firmly on his side, the "maverick," as Koizumi was called, was able to prod banks to write down bad loans from the 1980s. He cut wasteful public-works spending and privatized huge entities like Japan Post. He cast aside diplomatic niceties to visit North Korea.

Unfortunately, when Koizumi lost his public support -- largely because of distractions like his multiple visits to the controversial Yasukuni Shrine -- he lost his nerve. As his approval ratings dipped below 50 percent, he curbed his ambitions to remake the Japanese economy. Now, in the halls of Nagatacho, Tokyo’s Capitol Hill, Koizumi is remembered less as Japan's Margaret Thatcher or Ronald Reagan than as a cautionary tale.

Abenomics

As he kicks off his campaign ahead of Dec. 14 elections, Abe should pay heed. His own reform drive is stuck in first gear. Aside from massive Bank of Japan stimulus, Abenomics can claim few concrete accomplishments as yet. Abe has made no real progress on loosening labor markets, lowering trade barriers, cutting red tape or increasing innovation. An April sales tax hike sent the economy back into recession, while concern about Japan's debt burden prompted Moody’s on Monday to downgrade the country to the same level as Bermuda, Oman and the Czech Republic.

In a less gerrymandered and more representative democracy, Abe's LDP would probably take a beating on Dec. 14. The opposition Democratic Party of Japan is in disarray and isn't expected to put up much of a fight. Still, given his approval rating -- below 50 percent and falling -- Abe will almost certainly come out of the election with a weaker mandate than he had two years ago.

That should not be a signal for him to scale back his ambitions as Koizumi did -- quite the opposite. Japanese want Abenomics to work, and in theory, the reforms Abe has discussed are the right ones. Ordinary citizens, most of whom work for small- and medium-sized enterprises, simply aren't feeling its benefits yet. Disproportionately, those are going to huge national champions like Toyota and Sony, whose exports are benefiting from a weaker yen

As Koizumi did early on, Abe should appeal directly to the Japanese people to lend a renewed push to his structural reforms, which are facing resistance from the same vested interests that have stymied previous attempts at change. Once the votes are counted, Abe should unveil Abenomics 2.0 with a very specific timeline: Next month the parliament will move to deregulate labor markets, the month after to tweak the tax system to support startups. He should lay out quotas for corporations to increase the number of women in leadership positions, as well as specific benchmarks to make the bureaucracy more accountable. 

Abe's message should be: My fellow Japanese, this is our last chance to avoid irrelevance as China, India and Indonesia reshape Asia's economic landscape -- and I need your help. Please call your local Diet member and demand they get behind my policies.

Abe should keep in mind why voters backed him to begin with: his apparent decisiveness and determination to challenge old ways of doing things. His popularity has slipped, as Koizumi's did, when he's gone off on tangents -- passing a controversial government secrecy bill, moving to restart nuclear power plants, unnecessarily alienating China and South Korea with his own Yasukuni visit.

Second chances are incredibly rare in politics, let alone a third. Abe's return to the premier's office in 2012 was an opportunity to erase the embarrassment over his scandal-ridden 2006-2007 turn there. Voters seem willing to give him one more chance because they still hope he can shake Japan out of its lethargy. He won't get another.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Willie Pesek at wpesek@bloomberg.net

To contact the editor on this story:
Nisid Hajari at nhajari@bloomberg.net