Horie and LDP Boosters Have It Coming

Gregory Clark (Vice President, Akita International University)

Some Western media seem to want to dismiss the Livedoor scandal now convulsing Japan as an example of Japan's conservative establishment seeking to shoot down a high-flying, unconventional entrepreneur who had been too successful. The reality is quite different.

What we see is an establishment duped into believing that a group of brashly indulgent, fly-by-night operators led by a chubby manipulator, Takafumi Horie, 33, who was able to create an empire valued at over a trillion yen mainly by smooth talk, cooked books, stock-market manipulations and dubious "greenmail" was a business genius and model for the new Japan.

Even worse was the sight of Japan's prime minister and his close associates believing that this same Horie should be elected to the Diet as some shining representative of Japan's new generation. If ever a proof of the shallow vanity and lightheaded foolishness of Japan's present political leadership was needed, it is this.

Until his arrest Jan. 23, the Japanese media had shown great caution in criticizing Horie and his Livedoor Co. empire. Now they feel free to reveal much of the dirt and doubts they had accumulated over the years.

Some of the video footage they are releasing is devastating: Horie in a girly bar boasting how he can become prime minister of Japan simply by investing 4 billion yen to buy up the votes of newly recruited Liberal Democratic Party members; Horie in the middle of sweaty, half-naked inebriated executives dancing around on a party stage while he boasts how his company will soon become No. 1 not just in Japan but in the world; Horie repeatedly telling all and sundry that making money is the only worthwhile goal in life.

Some have compared the scandal to the Enron, WorldCom and other U.S. scandals. But in some ways this was worse. The Livedoor crowd was the Aum Shinrikyo of Japan's business world -- a group of jumped-up juveniles who believed that the gall and crudity of their moneymaking doctrines entitled them to take over the world. Fortunately the authorities have moved in before their poison could do more damage.

Caught up in this flimflam is footage of none other than Prime Minister Junichiro Koizumi and his economic guru, Heizo Takenaka, embracing the brash Horie as the ideal LDP "assassin" candidate to oppose the respected but Koizumi-excommunicated LDP elder, Shizuka Kamei, in Lower House elections last September. That the purported leaders of the new "structurally reformed" Japan could sink to this level in their efforts to win popularity is little short of disgusting.

Under harsh Diet questioning the pair of them have made sometimes whimpering, sometimes defiant, excuses for their egregious mistake. In any normal democracy, they would be fighting for their political lives.

In many ways the simplistic duplicity and mesmerizing ability of the Koizumi-Takenaka duo matches that of the Livedoor operation. Like Horie, they were slavish believers in the worst kind of imported U.S. economic doctrine -- that supply-side economics with its call for cuts in government spending would somehow save an economy suffering excessive supply and chronic lack of domestic demand. The results were equally disastrous -- a once strong economy driven into the ground for five agonizing years by dogmatic policies dogmatically enforced under the spurious mantra of "structural reform."

The extent of their failure is written in the statistics. Koizumi came to power promising he would take immediate action to cut the issue of government-deficit bonds to below 30 trillion yen annually and the overall national debt to below the then existing 700 trillion yen. Five years later he has just managed, by fiddling the books, to bring the deficit-bond issue back down to 30 trillion yen after it had ballooned to nearly 40 trillion yen. And the national debt? It's now over 900 trillion yen.

His economy is finally being dragged out of the doldrums largely by the vitality of the nation he has gone out of his way to antagonize -- China. Yet, up till now, he was able to persuade the Japanese public into believing he was some kind of economic savior bravely fighting for reform while expelling the alleged forces of antireform in his Liberal Democratic Party, namely the few like Kamei who realized the folly of his policies.

Takenaka comes out of the affair even worse. Embracing Horie in Hiroshima as the vanguard of the new economy, he told the cameras that together with Koizumi they would reform Japan's financial system. Today he tamely says he was acting on behalf of his party.

Meanwhile the Koizumi-appointed LDP secretary general, Tsutomu Takebe, who was responsible for having Horie stand for the Hiroshima electorate, insists he was acting only in a personal capacity. He had gone even further than Takenaka by publicly embracing Horie as "his son" and younger brother before the cameras.

The political fallout promises to be large. As with Horie, the media are now beginning to unleash their long-suppressed doubts about the quality of Koizumi's leadership.

For the moment the media are focusing on the dictatorial way he and Takebe have tried to assume full control of the LDP, in particular the ruthless way in which they set out to expel and then "assassinate" respected members of the party simply because they had genuine and well-founded objections to Koizumi's strange efforts in the name of "structural reform" -- to privatizing Japan's efficient and in some way admirable post office savings system.

The opposition parties are attacking on two fronts -- the confusion over U.S. beef exports and the approvals given to falsified data for construction projects. Both are seen as failures due to Koizumi's policy of entrusting important government responsibility to private organizations.

Within the LDP, itself long-suppressed resentments are also beginning to surface. In particular, the dislike for Takenaka who was been able via heavy media exposure to jump from being a humdrum economics professor keen to grasp at every trendy U.S. doctrine (he was a fervent admirer of the late '90s IT dot-bomb boom) to a dominating role in Koizumi's Cabinet, simply by endlessly repeating the structural reform mantra.

Whether Koizumi is able to continue to impose his policies, many of them mistaken, including his desire for a successor cut in his own image, is -- like the future of Livedoor -- becoming doubtful.

(This article appeared in the February 1, 2006 issue of The Japan Times)