DPJ Japan's Retro Style on Market Fundamentalism

The question of how to reinvent Japan, Inc. is one that has puzzled the world ever since the turn of the Nineties. How can this once-dynamic country be rescued from its moribundity?Despite all it trials and tribulations, leadership changes in Japan have been largely conservative. That is, perhaps, until now. There's interesting commentary from Democratic Party of Japan (DPJ) leadership. The party, of course,is widely expected to defeat the perennial Japanese incumbents, the inaptly named Liberal Democratic Party (LDP). Channeling Stiglitz-era Globalization and Its Discontents, he criticizes "market fundamentalism" for the ailments that have been visited upon Japan. From the Financial Times:

Yukio Hatoyama, the leader of Japan's opposition Democratic party who is strongly placed to become prime minister after elections this month, has condemned “US-led market fundamentalism” and vowed to shield his nation from the effects of untrammelled globalisation.

With the era of US unilateralism ending and worries about the dollar’s future role growing, Japan should also work towards regional currency union and political integration in an “East Asian Community”, Mr Hatoyama wrote in an essay published Monday in the Japanese magazine Voice.

Mr Hatoyama offered a robust defence of his political philosophy of yuai – fraternity – which critics have derided as wishy-washy wishful thinking, but which he declared a “strong, combative concept” and “banner of revolution”...

In his essay, Mr Hatoyama said the global economy had “damaged traditional economic activities” while market fundamentalism had destroyed “local communities”, citing the decision by Junichiro Koizumi, former LDP prime minister, to privatise Japan's post office.

“Under the principle of fraternity, we will not implement policies that leave economic activities in areas relating to human lives and safety, such as agriculture, the environment and medicine, at the mercy of the tides of globalism,” Mr Hatoyama wrote.

Analysts say that wide policy differences within the often fractious DPJ make it difficult to predict how such statements of principle might be put into practice. Mr Hatoyama highlighted the need for better welfare, more child support and wealth redistribution.

He made clear that while security ties with the US would remain a “diplomatic cornerstone”, Japan must do much more to tighten links with Asian neighbours such as China and South Korea.

“As a result of the failure of the Iraq war and the financial crisis, the era of the US-led globalism is coming to an end and …we are moving away from a unipolar world led by the US towards an era of multipolarity,” the DPJ leader said, adding that fears about China's military rise were a big factor in “accelerating regional integration”.

Japan should "aspire to the move towards regional currency integration" and "spare no effort" in building the security frameworks needed to make union possible, he wrote, adding that the example of European Union showed that integration itself could be the best way of defusing territorial disputes often seen as an impediment to closer ties.

Mr Hatoyama also emphasised the DPJ's campaign pledge to push devolution of power to local governments within Japan as embodying his fraternal values, again approvingly citing European examples. Dismissing the “Ministry of Finance-led theory” of trying to rebuild Japan's state finances through welfare cuts and tax rises, he said he would aim to reform bureaucracy, regain trust in the pension system and give regions fiscal autonomy. “Resolving our fiscal problems is impossible without comprehensively rebuilding Japan's political systems,” Mr Hatoyama wrote.

OK, this is interesting but often self-contradictory commentary:

1. Did it even occur to Hatoyama that freeing Japanese immigration policy to inject fresh consumer activity instead of having an aging population save ever more for the country's eventual geezerization makes more sense than dumping on America the pitiful? Record deflation doesn't lie.
2. So he wants fat welfare and pensions along with healthy doses of agricultural protectionism. How is this different from Japan as it is now? The usual question of who will pay for this largesse comes to mind in a country whose public debt burden is already the largest among industrialized nations. Maybe he should consider, well, bringing in immigrants who can help pay for this Obamanite orgiastic spending.
3. I like the idea of a regional currency. I also like his preference for European-esque economic governance instead of the Anglo-Saxon one. Remember, France and Germany have already escaped the clutches of recession unlike the US and UK. However, who will play the role of our Asian Bundesbank? Plus, why does he cite increasing regional integration as evidence of security fears abour China when he wants to include China in the development of a regional currency?

I have no trouble with wanting to wean the region off the white master's yoke. His ideas strike me as rather confused, however. We'll see if there is an improvement once he presumably wins office. IMHO, being Japanese prime minister is an even crappier job than being president of the United States. The American model of capitalism has been spectacularly discredited, but my suspicion is that Japan's problems are largely of its own making.