Articles:
A silver lining for Japan

The economic suffering here has been harsh and long, but at last political change is coming

In the race to report the worst economic contraction among rich countries this year, Britain is being run close by another island nation: Japan, the world´s second biggest economy. Japan is, however, winning the contest for the country with the most shambolic politics – this week its finance minister, Shoichi Nakagawa, resigned after turning up drunk to a press conference after the G7 summit in Rome last weekend. Nevertheless, Japan stands a good chance of being one of the few countries to benefit from the economic crisis.

Many Japanese would find that hard to believe. Unemployment is rising sharply; the big, famous Japanese names such as Toyota, Panasonic and Sony are all making losses; exports are plummeting; and manufacturing output has dropped to a level last seen in 1983. Any Briton who thinks the reason our economy is weak is that we no longer have much manufacturing should come to Japan, for the reason Japan is weak is that it has too much (20% of GDP, compared with 10% in Britain), making precisely the things that everyone has just stopped buying, such as cars and fancy televisions.

So where is the silver lining to all those clouds? It lies in politics, and the sharp kick in the pants that the economic crisis is about to give to the old political elite. A general election must be held by October at the latest, and could be forced much sooner. The same outfit – the Liberal Democratic party, which is actually a conservative group – has run the country for the whole of the past half century, barring nine months in 1993. The LDP survived even the country´s stagnation during the 1990s, when Japan´s financial crash destroyed its banking system. But, finally, the LDP is running out of road as fast as it long ago ran out of ideas. The prime minister, Taro Aso, has an approval rating that would shame even George Bush.

As a result, the main opposition, the Democratic party of Japan, a centre-left group, is miles ahead in the opinion polls. Its leaders are plotting what they will do when they win power in a manner reminiscent of Labour in 1997, though with a touch of 1979 Thatcher too. The party´s secretary-general, Yukio Hatoyama, says that as soon as it wins, the DPJ will outline its policies and fire any bureaucrat who won´t support them.

More than that, however, this opportunity matters because in Japan the public services are in desperate need of reform, just as the economy itself is. The national health system is starved of funds, with the recent tragic result that a woman died in childbirth after having been refused admission by several over-crowded hospitals.

The public pension scheme is in disarray, with the government having lost 50m pension records and many people distrusting the state´s promises. And, for all its fabled equality and social cohesion, this is a country where there is only a scant safety net for the unemployed, whose numbers are about to rise dramatically. Many of the new unemployed will be part-time and non-contract workers with low pay and few protections: new labour laws in 2001-03 enabled manufacturers to switch to cheap workers, raising profits but also enabling them to slash costs rapidly.

It is a country, in other words, that is in desperate need of a change of government, and the election of a party dedicated to repairing broken social services as well as shaking up the economy. No doubt as and when the DPJ wins power, it will bring disappointments and its own occasionally shambolic ministers. No matter. The important thing in a democracy is to punish those who have failed and to bring in a new crowd capable of making new mistakes. Japan has waited far too long for that.