Doing It Their Way

Toru Hashimoto, the mayor of Japan's third largest city (after Tokyo and Yokohama), rants on for more than 90 minutes in the sharp sentences that are his trademark. Everyone — not only in the room but also throughout the nation — hangs on to each syllable uttered by this youthful former TV personality. Inevitably, most of those syllables are vitriol hurled at the politicians running the country in Tokyo. They have become so beholden to special interests, Hashimoto charges, that they have turned deaf to the needs of the nation. The current electoral process "is against the principle of democracy," Hashimoto blasts. The Diet, Japan's legislature, "is moving further and further away from the will of Japanese citizens." He has proposed slashing in half the number of lawmakers in the Diet's lower house and eliminating the upper one altogether. "The nation's system of government is crap," he says.

Such blunt talk — an anomaly in the rarefied world of Japanese politics — has Hashimoto's critics screaming that he is a dangerous demagogue. But voters frustrated with their do-nothing national leadership instead hear a can-do, 43-year-old voice in an establishment dominated by stodgy old-timers. A recent poll shows that Hashimoto's Japan Restoration Party has become the third most popular in the country, in place to challenge the ruling Democratic Party of Japan. That support comes even though Hashimoto announced only in mid-September that his fledgling movement would contest parliamentary seats nationwide. With general elections expected in coming months, Hashimoto could become a powerful new force in national politics. "He's had a great impact by making people realize there could be a popular groundswell" against mainstream parties, says Jeffrey Kingston, an Asian-studies professor at Temple University's program in Tokyo.

Such public discontent comes as no surprise. The recent news out of Japan has been almost all bad. The government has appeared weak and aimless in an escalating dispute with China over the ownership of remote islands, with Prime Minister Yoshihiko Noda waffling between recalcitrance and appeasement. Like his predecessors, Noda has also struggled to implement his policy agenda at home. Though he scored a rare victory by gaining Diet approval for a consumption-tax hike to help close the government's perennially large deficit, he failed to win the support of his own Cabinet for a plan to eliminate nuclear power in the country by 2040. That measure would be widely popular in the wake of the terrifying meltdown at the Fukushima reactors after northern Japan was hit by a devastating earthquake and tsunami in March 2011. Japan's recent economic performance is no more encouraging. In August, the country posted a $9.6 billion trade deficit as exports — the economy's lifeblood — fell by 5.8%, while GDP in the quarter ending in June inched up by an annualized 0.7%.

What Japan needs to do is no secret. The country has to overcome its protectionist predilections to integrate more with a roaring Asia. Meddlesome bureaucrats have to liberalize the domestic economy to spur competition, efficiency and entrepreneurship. The government must build a better social safety net to persuade Japanese to switch from being savers to spenders. Consensus-oriented CEOs have to take more risks and boldly invest in up-and-coming businesses.

Without such reforms, Japan can only wither. Much of the country, particularly Tokyo, appears prosperous, yet Japan's GDP is roughly the same size as it was 20 years ago. An aging population leaves fewer productive workers to spark a revival. Some 35% of the remaining able-bodied are stuck in unstable short-term jobs. Japanese companies in industries they once dominated, like consumer electronics, are being outmaneuvered by more nimble competitors. The International Monetary Fund expects Japan's national debt (though mostly financed locally) to swell to 235% of GDP this year, the highest level in the industrialized world. Small wonder that many Japanese worry the future will bring only further decline. "Both Japanese companies and the people of Japan have this wrong perception that we are still rich, but we are not anymore," says Tadashi Yanai, CEO of Tokyo-based Fast Retailing, which operates the Uniqlo chain of clothing shops. "I'm beginning to fear we are on the verge of collapse."

There are signs, however, that some Japanese won't accept the status quo. Last year's nuclear disaster achieved something unusual in often apathetic Japan: getting people out on the streets. Tens of thousands demonstrated to pressure the government to eliminate nuclear power entirely. Shota Mizukoshi, a 20-year-old college student at a protest in Tokyo in August, hopes more will join them. "A new atmosphere has come, that we are showing strong political opinions, that they are nothing to be ashamed of," he says. Another protester, cleric Mamoru Yamamoto, feels that the Japanese are finally standing up for their own future. "Some change is really going on," he says.