Shifts in Japan’s Political Economy Regime
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Transcript of Shifts in Japan’s Political Economy Regime
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Shifts in Japan’s Political Economy Regime
Adjustments and changes
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Conservative dominance (’60s)
• Power and influence of conservatives rose– at the expense of the political left
• conservative supporters benefited– prosperity and peace– side payments
• successes in economy and in politics reinforced each other
• favorable international environment
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Challenges (1970s and 1980s)
• Socioeconomic bases of support– new political parties, independent
movements, and changes in voter patterns– divisions within regime supporters
superseded earlier left-right divisions– central concern of regime continuity
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Socioeconomic challenges
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Socioeconomic challenges
40%
20%
40%
16%
18%
66%
10%
11%
79%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Employment at Different Businesses in Japan
firms 40% 66% 79%
self-employed 20% 18% 11%
family business 40% 16% 10%
1947 1970 1985
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Socioeconomic challenges
• rise of large and technologically more sophisticated industries
• rise of the service sector firms
• relative decline of agriculture sector
• relative decline of small businesses
• shrinking bases of the conservative regime’s electoral coalition
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Challenge 2: aging population
5%
7%
14%
0%
2%
4%
6%
8%
10%
12%
14%
1945 1975 1995
% of Japanese Population Aged 65 or Older
14%
25%
33%
0%
5%
10%
15%
20%
25%
30%
35%
1975 2000 2015
Ratio of Retirees to Workers
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Challenge 3: labor shortage
• Economic success– rising demand for labor
• expanding influx of labor after WWII– low-cost, young, highly-skilled
• changing age profile of the population– bargaining power shift from management to
labor
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Challenges to LDP
• Urbanization and rise of middle class
• Socioeconomic base of conservative support shrank
• Mobilization capabilities of LDP supporters declined
• People identified with party independents increased– outnumbered LDP supporters in 1974
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Challenges to LDP
• Increased voter option in 1960s and 1970s– formation of new parties– transformation of existing parties– in both conservative & the political left
• threatened both LDP and JSP
• threatened conservative electoral and legislative hegemony
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LDP responses (1970s & ’80s)
• Attract new electoral support– shore up conservative support– draw away organized labor from DSP & JSP– attract the new middle class
• non-voters and non-partisan voters
• LDP dilemma between traditional supporters and new appeal
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19701975
19801985
19901991
1992
Japan
United States
0
1
2
3
4
5
6
7
Infrastructure Spending as % of GDP
Japan 4.5 5.3 6.1 4.7 5.1 5.1 5.7
United States 2.6 2.1 1.7 1.7 1.7 1.8 1.8
1970 1975 1980 1985 1990 1991 1992
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LDP responses
• Adjustments in policy or institutions
• less tightly linked policy profile
• firm-level cooperation with labor
• substantial deficit finance for political target
• fiscal austerity and privatization
• manufacturing firms became multinational
• defense and security policies
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LDP electoral recovery
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Economic recovery (1980s)
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Bubble burst
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Stock market woes (2000s)
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International challenge
• External conditions– challenged conservative policies– threatened conservative socioeconomic
support
• challenges to exchange rate policies– Bretton Woods monetary system broke down
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International challenge
• international price of raw materials– Japan’s dependency on imported oil (99%)– oil prices quadrupled in 1973– oil prices rose by 2.8 times in 1979-80– inflation– balance of payments– domestic productivity
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International challenge
• Increasing pressure from US and Europe– reductions in Japanese tariffs, import quotas,
and non-tariff barriers– voluntary export restraints– open Japanese market– Japanese military spending
• challenges to vital aspects of Japan’s conservative economic policy profile