Japan’s right-wing government is back in power after one of the odder general elections in recent memory.
The administration of prime minister Shinzo Abe had two years left in the tank and fought Sunday's poll largely on its handling of the world's third-largest economy, despite sending it tumbling back into recession. The cost of the poll, according to public broadcaster NHK, was $500 million.
Abe gambled that a clear win would help silence opposition for what will certainly be a bumpy political road ahead, dominated by divisive debates on nuclear restarts, tax, and Japan’s long-standing pacifism.
The gamble paid off. Amid widespread apathy and the lowest turnout in Japan’s postwar history, voters gave his coalition, comprising his Liberal Democrats (LDP) and the Komeito party, a two-thirds majority in the lower house.
Abe told voters his inflationary economic plan, dubbed “Abenomics,” was working and pleaded for more time to spread the benefits. His government campaigned on the electoral slogan “There is no road but this”.
His critics say the historically low turnout undermines his claims to have the support of the electorate.
"Abe sought a mandate and got a lukewarm, grudging acceptance that there is no alternative," says Jeff Kingston, head of Asian studies at Temple University, Japan.
Abe has overseen a huge expansion in the country’s money supply and sent the stock market soaring by more than 70 per cent since he came to power. But real wages are falling and most small- and medium-sized companies are suffering from a policy of bludgeoning down the yen.
Spruced-up trickle-down
With criticism growing that Abenomics is simply a spruced-up version of trickledown economics, the prime minister used his post-election speech on Monday to pledge that he would lean on Japan’s corporations to raise wages. “The top priority is the economy,” he said.
Many voters are hopeful that the government will focus on making their lives better. They also want Abe to pull Japan's relationship with China out of what appeared for most of his term to be a death dive.
Trade and investment between the two countries have plummeted as they square off over a clump of goat-infested rocks in the East China Sea that Japan owns but both China and Taiwan claim.
Abe’s revisionist instincts and rejection of what nationalists in Japan call “apology diplomacy” for the nation’s empire-building in the second World War have complicated an already fractious relationship with Beijing.
Japan’s neighbours are also suspicious of Abe’s long-cherished aim to challenge the constitution’s war-renouncing article nine. Analysts say he must tread carefully to avoid a rift with his party’s pacifist coalition partner, but the government’s super-majority makes a challenge to the article more likely.
Abe faces scrutiny, too, over his government’s drive to scour deflation out of the economy. In late October, Bank of Japan governor Haruhiko Kuroda announced it was upping its purchases of government bonds to a staggering 80 trillion yen (€548 billion), and he and his supporters believe Japan can go on printing money until it hits a 2 per cent inflation target. But some analysts say Abe risks a huge crash by, in effect, nationalising the nation’s bond market.
Then there’s Japan’s public debt, which stands at 240 per cent of GDP. More than 90 per cent of that debt is domestically held, putting the nation out of harm’s way for now. But ratings agency Moody’s fired a shot across Japan’s bows this month by cutting its credit rating.
Rickety finances
The government says a consumption tax hike will help repair the country’s rickety finances, and the elusive virtuous cycle of Abenomics will further boost tax revenues. But the economy is in recession and the tax hike has been postponed.
Abe’s next term will be dominated, therefore, by discussion about the third and least aerodynamic of his three policy aims: his long-promised reforms. Does he have the stamina to boost the female workforce and face down Japan’s energy and medical lobbies?
Will he push through a huge trade deal with the US that would bring him into conflict with the LDP’s bedrock support among farmers? Unless he challenges Japan Inc, Abenomics looks very much like the LDP’s old spend-and-pump economics, garnished by Abe’s dangerous nostalgia for big-power status.