Japan's Unwanted Election

In November, the Japanese economy slipped officially into recession. Growth rates had been negative for three quarters since October-December 2013. The January-March quarter saw consumers rush to buy expensive goods before a consumption tax hiked from 5% to 8%. Slow income growth in Japan is a key factor, with prices rising faster than wages.

Consumers continue to avoid buying big-ticket items, like autos, computers, and electrical appliances. The weak yen (now around 120 to the dollar) has helped some exporters, but has made imports more expensive, including food and daily necessities. It has hurt small companies which rely on imported materials. Big companies, benefiting from a rising stock market, are flush with cash, but not investing at home.

Power struggle masked as an election
Abe was reportedly surprised by the GDP showing minus growth. The Finance Ministry had assured him before he first raised the consumption tax that growth would resume in the fall. Startled, Abe responded by postponing the second planned tax hike.

Some powerful figures in his party opposed and challenged his move. With Abe?s popularity plummeting, linked initially to scandals in which two cabinet ministers resigned, talk has begun about his replacement. To reassert control, Abe felts that dissolving the Lower House for a snap election would reestablish his dominance. Thus, the election is a power struggle masked by a ?referendum? on the success of his economic policies.

Local chapters of the LDP are unhappy with the surprise election. Local assembly members have to face unified local elections next spring and expect to have their hands full preparing for those races. A snap election requires enormous energy from the LDP?s local support bases, often run by elderly staffers. They fear that they will be too weary to prepare for the spring elections. Reports suggest that many are not overly cooperative with the national election. If this is true, the vote-gathering machine of the LDP in the regions may not be operating at full speed for the December election.

Referendum on Failed Policies
If the election is a referendum on a ?failed? economic policy, what is the electorate to do? They cannot vote for the LDP because of satisfaction with the state of the economy ? most polls show up to an 80% dissatisfaction rate.  They cannot easily vote for the opposition parties, particularly the Democratic Party of Japan (DPJ) that they had thrown out of office in 2012 because of its policy failures. The DPJ is offering nothing new in its 2014 campaign manifesto. 

The opposition is good at caustic criticisms of Abe policies, accusing him of holding a snap election to mask his failure to grow the economy. Yet, with little to offer as solutions there is no incentive for voters even to cast protest votes against the LDP. Despite their critical views on Abe?s policies, most people are not upset enough to step out of the mainstream. In fact, many of the undecided voters ? up to 50% in some polls ? frustrated or indifferent -- just may decide to stay home on Dec. 14. If it is still snowing heavily in the mountainous regions, as it does in early December, many definitely will stay home.

The latest polls show the electorate?s dilemma well. The Kyodo poll for November is typical of most opinion surveys. It found that the Abe Cabinet?s disapproval rate (47.3%) now outpaces the approval rate (43.6%). Despite such public dissatisfaction, 28% of the respondents said they would vote for the LDP in the proportional representation segment, while only 10.3% indicated they would vote for the largest opposition party, the DPJ. But 41.2% were still undecided.

Significantly, 84.2% of the public said that they do not feel that the economy has improved under Abe, and 35.1% saw the economy as the important campaign issue. If such is the public?s view, it would seem safe to conclude that LDP will not do well in the election, but such may not be the case, even if there is a large turnout, including the undecided voters.

Other media surveys, such as the Asahi Shimbun, predict that the election outcome will give the LDP and its coalition partner 300 seats or more. The Mainichi in the latest survey gives the coalition even more seats, which could give it a two-thirds majority in the Lower House. Only one survey, a district-by-district tally by one weekly magazine predicted that the LDP could lose over 60 seats (it now has 295) and thus its majority by sinking below the 238 line. The LDP has ruled 266 seats for the coalition as the targeted goal.

Why the discrepancy? The weekly expects the opposition parties to do much better than expected, thanks largely to cooperation to run unified candidates. Running candidates against each other only split the vote for the opposition, giving the win to the LDP candidate. The weekly also expects the number of LDP votes will drop, as well. This combination could result in many wins for the opposition candidates in districts where the LDP won in the previous two elections.

More of the same thing?
It is an open question whether the opposition picks up seats or the LDP again wins big. There are a high proportion of unaffiliated and undecided voters. The Prime Minister has taken care to remove as much controversy from the campaign as possible to focus on the mere issue of stability. Collective self-defense (CSD), membership in the Trans-Pacific Partnership, and even restarting of nuclear power plants are strangely absent from the campaign literature and speech-making.

Tough decisions by Abe on TPP and legislation on CSD will not come until next year. Moreover, the voters see Japan?s relations with the U.S. as relatively good, sour ties with China slowly improving, and Abe?s efforts on the North Korea abduction cases a noble effort. As for poor relations with South Korea, most Japanese blame Seoul. 

In an unwanted election, in which the only issue is the economy, and the only cards seem to be held by the ruling parties, voters lining up on December 14, though disgruntled, may feel they have little choice but to stick to more of the same thing. Be prepared for the election results to reinforce another long reign of the LDP. And one that will further embolden Mr. Abe.