Japan’s election: Why is Shinzo Abe Taking an Unnecessary Gamble?

A couple of days after Japan’s Prime Minister Shinzo Abe called snap elections for Japan’s Lower House of the Diet, a website named “Why hold an election now?” caught public attention in Japan. Beside the amazing story that a 4th grade kid Nakamura created this website (which later turned out to be false), it became so popular as it captured the question that comes to the mind of most Japanese citizens.

We are currently only two years into a four-year term for the Lower House. There is no substantially controversial agenda on the table. So why now?

The last election, of December 2012, resulted in the loss of the Democratic Party of Japan (DPJ) after their catastrophic mismanagement of the East Japan Earthquake and the Fukushima nuclear accident. Naturally, Liberal Democratic Party (LDP), led by Abe, won a landslide victory. Since then, Abe has been deliberately and tactically crafting and executing his aggressive economic policy, so-called Abenomics. He immediately replaced the Bank of Japan’s Governor with his ally Kuroda, allowing him to introduce an aggressive monetary expansion policy that resulted in a weaker yen, helping the long-time suffering export industries of the country.

This successfully kick-started a virtuous cycle in the economy. Japan may have got out of its “deflationary spiral,” with CPI starting to inflate this June. The unemployment rate fell to 3.5%. Nikkei Stock Average hit a 7 year high of 17,000 this November. Yes, Abenomics had an impact on the Japanese economy.

Impact – this is what Abe learned from his political mentor Koizumi. Koizumi won a huge victory on a snap election he called when his  Japan Post privatization proposal was rejected by the Diet in 2005. He presented the public with an impactful political agenda, thus attracting people’s attention, and their votes and allowing him to override the Diet.

This election, however, doesn’t look as heated. In fact, Abenomics is not really controversial in Japan. Some parties partially oppose them, but very few public debates are happening over them, starkly different from the Koizumi’s privatization election.

This leads us to the 4th grade kid’s question “Why hold an election now?”

The simplest answer is that Abe knows that he will win, at least modestly, as long as he presents his impactful – but not controversial – agenda. He can’t wait until the term ends in 2 years. If he wins this time and is given another 4 years, his tenure will be very close to the longest one that a Prime Minister of Japan has had since World War II.

Stability is important. Japan had 3 Prime Ministers during the previous 3 year DPJ administration. Japan had 14 Prime Ministers in the “lost 2 decades” before Abe. This political turbulence affected the country in a bad way. The lack of a leader with long-term vision is one of the main causes for Japan’s decade-long suffering as it oscillated between various leaders and agendas.

If Abe successfully maintains his administration for four more years, the country will start to move toward his vision – whether good or bad. He brought a vision that the country (or at least the administration of the country) can aim to achieve, which Japan seldom had before. This is good for Japan.

Abe will have achieved this stability by a series of clever tactics: deliberately timing elections; thoughtfully choosing an impactful agenda. Japan’s excessively frequent political oscillations in the past, however, have root causes, such as distorted electoral zonings, which Abe hasn’t addressed yet. Abe should use his stable four years to tackle these root causes and lay the groundwork for stable politics in Japan for future generations.



Satoshi Mukoyama, Japan

About

Satoshi Mukoyama, a Japanese national, is an MBA candidate at Harvard Business School. Prior to HBS, Satoshi was an infrastructure investment professional with Mitsubishi Corporation - a Japanese conglomerate - and its affiliated infrastructure fund managers. Satoshi worked on a variety of transactions globally, as well as helped the firm’s fundraising from Japanese institutional investors. Prior to his infrastructure assignment, he also worked in Mitsubishi’s real estate investment business. Outside of work, Satoshi enjoys traveling, and has been to more than 50 countries. Satoshi received his BA in Cultural Anthropology from the University of Tokyo, and also studied at the University of Toronto as an exchange student.


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