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Same Old Same Old
The ruling party's self-preservation drive imperils everyone else
By PETER McKILLOP
November 5, 1999
Web posted at 7:30 p.m. Hong Kong time, 7:30 a.m. EDT
Last April, Japan's tightfisted shoppers, nervous about the stagnant economy, were urged to shop till they drop and given nifty little government vouchers to help them spend their money. Economists at the time mocked the proposal as hopelessly naive. Skeptical political observers saw a darker motive: another trick by Japan's ruling Liberal Democratic Party to co-opt a political rival in order to maintain governing power.
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The vouchers failed, as economists predicted, but the LDP succeeded in keeping its political grip. That's the way things work in Japan. If Bill Clinton won the American election in 1992 on the slogan "It's the economy, stupid," the LDP's rallying cry should be: "It's our political survival, stupid."
Preserving incumbency continues to drive decision-making in Japan. Next week we can expect the same. The government will present yet another massive fiscal-spending package--its method of economic bailout since the economy slumped a decade ago. An additional $130 billion will be added to the already $1 trillion spent in Japan's quixotic quest to preserve its hopelessly antiquated economic markets.
What makes this next economic package particularly damaging is that it threatens to undermine the first real sprouts of economic progress that Japan has seen in a generation. The new package would provide $96 billion in life-supporting loan guarantees to bankrupt small and medium-size businesses, now nicknamed "zombie" companies. After all, why bother with the difficulties of restructuring if you can just get a government bailout?
Analyst John Neuffer argues it would be "political suicide" for Japan's politicians to do the right thing by letting the "restructuring tiger out of the cage." But Japan, in fact, has a long tradition of ritual suicide as a way of showing responsibility for regretful acts. Perhaps the time has come for the LDP to pull out its ceremonial sword and do the deed. That would give a new generation of politicians the chance to right the nation's ills. At least it would bring honor to its shameful behavior.
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