Prime Minister Abe as “The Great Dictator” (SNA)

SNA (Tokyo) — For almost a year now after his thumping victory in December 2012 we have found ourselves surprised again and again by Shinzo Abe. We have asserted repeatedly that the Abe that we were witnessing was not the “real” Abe, and that the agenda he was pursuing was based on a tactical calculation about what was necessary to maintain public support, but not a reflection of his basic character. At first, the obvious explanation for the credulity-straining moderation of this true believer in rightwing causes was his objective of winning the July 2013 House of Councillors elections in same convincing fashion that he had won the general election eight months earlier. But in the months immediately following the upper house elections, his unforeseen discipline seemed largely intact. What was causing it? Perhaps a keen understanding that the Obama administration was wary of his administration’s rightwing tendencies? Or perhaps a realization that international triumphs like the successful bid for the 2020 Olympics depended on a perception of good behavior? Or perhaps it was a growing addiction to basking in unaccustomed public popularity after the (rightful) ruling party’s three painful years in the political wilderness? The Abe government had bent so far in the direction of compromise and conventional realism that the prime minister’s own rightwing political base had begun to entertain serious doubts about whether or not they should still offer him support. Well, that turned out to be the limit: In November 2013 the true colors of Shinzo Abe and the foully-misnamed Liberal Democratic Party finally began to shine through with a vengeance.

This Diet session was supposedly the period in which Prime Minister Abe was going to flesh out the “third arrow” of Abenomics. We were supposed to be hearing about his bold initiatives to effect structural reform and to bring sustained growth back to the economy. Most of those efforts seemed to fizzle, however, as vested interests (some of them with quite valid points of dispute) were able to block the more radical elements of the restructuring schemes. What the Japanese people got instead was law after law regarding defense policy.

This included, of course, the establishment of the National Security Council, fulfilling a long-held Abe dream that had been frustrated in 2007. The prime minister got to appoint rightwing fellow travelers to the executive board of NHK, which is expected to pay political dividends for many years to come. The Cabinet abolished all remaining restrictions on the types of weapons that the Self-Defense Forces can carry when on missions abroad. Japanese ships were authorized for the first time to begin employing armed security guards. The SDF may now use land vehicles or any other kind of transportation when they are outside Japan. Neo-nationalist school textbooks are being forced down the throats of local school boards across the nation, even on a tiny island in Okinawa which is trying to resist this imposition. And, most notably in the final weeks of the Diet session, a harsh “Secrets Protection Law” was established, over the fierce protests of human rights and media organizations, which is designed to terrorize those who might offer unauthorized leaks to the public and, at least in its earlier stages before opposition consolidated, was also intended to intimidate journalists themselves from challenging government pronouncements.

That, boys and girls, is precisely the Shinzo Abe that we were expecting all along.

Naturally, now that the authentic Abe is finally coming into public view, the polls are showing a substantial drop in his cabinet’s support rate. Although only a few polls are available at the time of writing, in recent weeks it appears Abe has lost about 10% of his public support over these matters, falling from the high 50s to the high 40s. Historically, a Japanese cabinet support rate in the high 40s is still rather sound, so there’s no need for the LDP to panic. The Abe government rose to impressive heights over the excitement and hopes generated by its “Abenomics” policies. So long as the average Japanese citizen believes that some good will still come out of this government’s economic policies, Shinzo Abe will be secure in his position.

So long as…

But is Abenomics really on track? We are stronger on political analysis than on economic analysis, but there seems to be sufficient reason to believe that Abenomics is not panning out the way that it was designed.

Our understanding of Abenomics is that it is fundamentally aimed at increasing consumer spending, creating business expansion, and thus growing the Japanese economy out of the worst dangers of its massive public debt as tax revenues naturally increase. Part of the effort is psychological; to convince businesses to invest and consumers to spend.

But the figures we see suggest that the plan may be going terribly awry.

Yes, the Yen depreciation has boosted the profits of Japanese exporters and allowed them a sigh of relief. Yes, the stock market is booming. Yes, large corporations are amassing hordes of cash that they don’t know how to spend.

But little of this seems to be reaching the real economy, the average Japanese workers.

Despite the criticisms of some senior ministers like Taro Aso and Akira Amari, and sympathetic noises from business leaders, worker salaries are not rising, and have in fact fallen slightly since Abe came to power. As a result, we have not been witnessing a massive boost in consumer spending.

Moreover, some economists warn that the stock market rise looks rather like a bubble, and that Japanese companies don’t have enough opportunities to put their capital to productive use in the domestic economy. They are just sitting on their mountains of cash and doing little.

Next April the national consumption tax will rise from 5% to 8%. That suggests the likelihood that the spending figures from now until the end of March will look pretty good as consumers take advantage of their last opportunity to buy products at the 5% rate.

However, this could set up a steep fall in consumer spending next summer. One wonders if “Abenomics” will collapse together with it, in spite of some efforts to simultaneously increase government spending.

The nightmare scenario is that by next summer we will have a situation in which worker salaries are stagnant, inflation is finally rising due to the Bank of Japan’s monetary policies, the tax burden on ordinary people is heavier, and the Japanese people stop buying anything except the bare necessities. This, in turn, would cause the nation to sink further into debt as tax revenues decline rather than increase.

We never really liked Yoshihiko Noda as Japan’s prime minister for a number of reasons, but it is interesting to compare him with the incumbent. In order to pass the consumption tax hike that he was clearly convinced was his duty to enact as a responsible leader, Noda was willing to sacrifice his personal popularity and the unity of the Democratic Party of Japan.

How tragic and ironic it would be if all Noda really achieved was to pave the way for a Shinzo Abe who was willing to spend recklessly for the sake of temporary popularity and the advancement of his rightwing security agenda, but with the result of engendering the same stagnant economy, even deeper public debt, and the added bonus of inflation plus higher taxes for ordinary consumers.

Another period in recent history — September 2007 to August 2009 — should also tell us another thing: That the LDP will be perfectly happy to steamroll their agenda through the Diet whether the public supports them or not. In those days, they repeatedly made recourse to the House of Representatives supermajority bequeathed to them by Junichiro Koizumi in order to override the opposition-controlled House of Councillors, even when the opinion polls showed that the public firmly opposed their policies.

Likewise, we shouldn’t expect the strong-arm passage of the Secrets Protection Law last Friday, which polls showed the public opposed 2-to-1, to be a singular event. From now until July 2016 we can confidently predict that rightwing law after rightwing law will be passed by the LDP-controlled Diet.

Naturally, the LDP will prefer to continue to be popular rather than unpopular, but if political and economic conditions turn against them, they will have no compunctions about forcing their agenda through, no matter what the critics say.

Oh, the happy days we yet have in store in this reborn era of the LDP!

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