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July 23, 2004

Political Agenda after the Upper House Election
- Need to Show a Blueprint of the Government for the 21st Century

Takeshi SASAKI (President, University of Tokyo)

Most of the issues the Koizumi government faces today, such as the postal services reform or the so-called triple reform of the local government tax and fiscal systems, are inseparable with the necessity to reexamine the traditional role of the government. Redefining its roles and functions and establishing a government suited for the 21st century is now the most significant challenge for the politics.

Two facets of the reform policy

The rating provided by the people at the Upper House election on the achievements of Koizumi government for the past three years was not necessarily overwhelming. The Liberal Democratic Party (LDP) was able to save face only with the last minute support catered by the New Komeito and (its sponsor) Soka Gakkai. Polls indicate Mr Koizumi's popularity, brought about by carrying a flag of "structural reform" and avowing to "destroy the LDP" has lost its fresh charm.

From a political point of view, the LDP's poor results in the recent election could partly be dismissed as a backlash of the huge gain attained in last year's Lower House election, and the future of the regime lies solely in the levels of cohesiveness and the approval rate of the leader within the regime. There are many who point to the possibility of a rough road ahead for the government while there are those who say, as the national level election is not expected for the next three years, there should be ample time for the current regime to tackle the unsettled problems. It is still worthwhile, at this juncture, to review the essence of "structural reform" as touted by the Koizumi regime in order to analyze the pending issues.

There have been, from the outset, two facets to Mr Koizumi's "structural reform" policy. One is to reform the economic structure and to lay a track to deal with the negative legacy typified by the bad-loan problem. The other is to deal with the inherent problems at government and public sectors such as the postal service and pension system.

The Koizumi regime approached the former issue of economic reform not by traditional measures such as enhancement of public work projects but by patiently waiting for the private sector to voluntarily initiate the wave of "structural reform" while carefully guiding to avoid real crisis. The style of policy management, where retaining a sort of impassiveness to the everyday swing of the stock market and stubbornly reciting the need for structural reform, has effectively changed the relationship between the government and the economy long sustained since the end of the WWII.

The contention involved here is evident in the argument on the recent economic turnaround, whether it is "because of" or "despite of" the Koizumi policy. It must be noted also that the policy, as a result, induced expansion of income disparities and drastic change in employment environment, which in effect has forced the system, where economic accord has geared to political stability, into the thing of the past. The evaluation of such a "structural reform" is bound to differ among various spectra of the society, which has resulted in the less support in the election for the current regime than the reported figures of economic recovery might have warranted.

The second facet of the structural reform include areas of postal services reform, pension fund systems reform, and the triple reform of the local government tax and fiscal systems reform. This is where the conceptual ability and the true power of the regime are tested unequivocally. The stance of impassiveness does not work here, as evidenced by the people's response to the pension fund reform, where the displeasure of the people had a direct impact in gauging the government. Many of the issues lie ahead for the government are of such nature and the Koizumi government will be facing a tough examination on its real strength to resolve those difficult problems.

Mr Koizumi has often used the term of "privatization" in tackling this type of issues, but a number of questions have been raised as to the definition and effectiveness of the terminology. The pending issues need to be ultimately approached by determining such factors as the relationship between the government and the people, or the services provided by the government and the cost borne by the people, which require a tremendous power of imagination by the government to assess, which cannot be sufficiently described by a simple word such as "privatization."

"Privatization" is not enough to value governmental functions

Conceiving the issues in the context of politics would lead to the question of assessing the role of the government in the 21st century world of economic society. In other words, this is to contemplate a new form of government for the new century. The term "privatization" is by definition an anti-governmental rhetoric, and such rhetoric would not suffice to discuss the role of the government. The pitfall of the policy lies in the fact that such rhetoric would halt a thought stream and immobilize the power of imagination on the role of the government.

The fact that the policymakers, vested with the power of running the government, are unable to deliver an affirmative message on the role of the government is a sign of serious crisis. It may be true that the functions of the government as defined in the latter half of the 20th century need to be reviewed, but it is necessary to simultaneously envisage a new objective for the role of the government. This is an issue indivisible to answering a naive question on "how the government sees the society and where is it leading to." The handling of the pension fund reform, which turned out to be the major evildoer in the recent election for the current regime, had been interpreted by the people to not be up to the standard.

The redefining of the role and function of the government is an operation which affects the core of politics. It would need affirmation of facts and identification by practitioners. The problem with Japan's party politics is the habit of inconsiderate and rampant policy discussions without regard to taking these basic steps. As there is no unit within the government to review the roles and functions of the government, the political arm represented by the cabinet must bear the task.

People are aware that the socioeconomic of the 21st century is different from that of the 20th century. Realizing that fact, the politics need to unbundle and reestablish the roles and functions of the government, and then present the results to the people. Campaign pledges and "manifestos" thus far do not provide for sufficient dialog between the politics and the people in this regard, which requires the determination of policymakers on further preparation and commitment.

In order to proceed with this operation which affects the core of politics, not only the concept but the careful building of the actual framework is also necessary. It is obvious that the realization process of a policy is not only the means but also what would affect the effectiveness of the policy itself. But, as in the case of the triple reform of the local government tax and fiscal systems, despite its complexity, the realization process is left to the haywire of various governmental agencies struggling to take lead. The issue involves a very fundamental structure for the country, in which the relationships of national and regional government are supposed to be discussed. The fact that such a significant issue was presented as a side job to the budget bill in the diet at the end of last year indicates the lack of political sense in determining the precedence of political agenda.

An important function of politics is to streamline the administrative process and provide the society with a sense of speed, but in a system where policies are adopted at the end of fatigue and vain effort, the prospect of overhauling the government's function is hopeless.

The demand for the government's strategic ability and foresight is ever increasing as the domestic structural transformation and international fluidization is progressing. The two recent national elections, last November and earlier this month, have reconfirmed the fact that it is impossible to return to the past, and the need for establishment of the new functions of the government and the new relationship with the people for the 21st century. The two major parties, the LDP and the DPJ, are expected to compete in defining the structure for the future, but it needs to be formulated based upon and backed by the realities of the 21st century.

Megalomania and self-degradation are both harmful. But humbly and with subdued confidence, it could be said that we might now be in a favorable position to conceptualize the 21st century Japan. It is important, therefore, the responsibility of the politics to soft-land the political conflicts through various reform measures in the next few years.

Constitutional amendment as a subject of discussion

Many suggest that the issue of constitutional amendment will become a large political agenda in the near future. There is obviously no reason to inhibit the politics to take up the theme as needed. But it needs to be realized that the constitutional issue is just another of vast political agenda, and the efforts should not be exhausted to tackle the issue while leaving the critical problems indicated above unattended and postponed.

The thought that discussion of constitution would fulfill the responsibilities of the politics is a shaky notion. No solution could be reached on the pension system problem no matter how intensive the constitution is debated.

After more than ten years from the political reform, with the trend toward the two-party system strengthening, Japan's party government has begun accumulating necessary elements to prepare for forming a new profile of Japan for the 21st century. Depending on whether the Koizumi regime would simply serve the function to terminate the ancient regime, or would be able to bring out the power and strength to tackle the huge issue, Japan's politics could develop and display achievements beyond imagination.

(The original Japanese article appeared in the July 14, 2004 issue of Nihon Keizai Shimbun.)

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