political-bureaucratic alliances for fiscal restraint in...

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Political-bureaucratic alliances forfiscal restraint in Japan

Gregory W. Noble　　

Abstract

Japan’sdismalandrapidlyworseningfiscalsituationhasledtoincreasinglydesperatecallsforboldpoliticalleadership,andbitterindictmentsofelitebureaucratsasprofligatespendersmoreinterestedinprotectingtheirownjurisdictionsandbudgetsthaninrestoringbalancetothenation’sfinances. In thecampaign for the2008HouseofCouncillorselections, the left-centerDemocraticPartyofJapan(DPJ)andWatanabeYoshio’sright-leaning“YourParty”(みんなの党)couldagreeonlittlebuttheurgentnecessityforpoliticalleaderstobringrecalcitrantbureaucratsundercontrol. WhileJapan’sfiscalsituationisindeedgrave,wastefulspendingisnottheprimarycause,as suggestedby theOECD’sEconomic Survey of Japan 2008: Achieving progress on fiscal consolidation by controlling government expenditures: “...thedeficit fell at anannualpaceofaround½percentofGDP,adjustedforcyclicalfactors,between2002and2007,”withrevenueincreases(mostlyduetoimprovedeconomicconditions)andexpenditurecutseachcontributingabouthalfoftheimprovement(OECD2008).Particularisticspendingonareassuchaspublicworksandagriculturalsubsidiesdeclinedsharplyoverthatperiod,anddespiteJapan’sagingpopulation, aggregate spending remained remarkably restrained. Japanese finances diddeterioratesharplyin2009-2010,asthegovernmentengagedinadditionaldeficitspendingtocounterthesharpdeclineinexportsandoveralleconomicgrowthcausedbytheglobalfinancial

Japan lackspolitical leadershipandwallows inpork,criticscharge,yet fromthe late1990sJapanese leaders exercised surprising restraint over aggregate spending, and reorientedbudgetaryexpendituresfromdistributiveoutlayssuchaspublicworkstowardsocialwelfareandotherformsofprogrammaticspending.Thedeparturefromparticularismreflectednotonlycommonly-citedelectoralandbureaucraticreformsstrengtheningthehandoftheprimeminister,butalsotheeffortsofseniorLDPpolicyexpertssuchasfiscalhawkYosanoKaoruand rising tide advocate Nakagawa Hidenao to combine with sections of the bureaucracy,particularly officials seconded to the cabinet from the Ministry of Finance and METI, toovercomefactionalandbackbenchresistanceandrestrainexpenditures.LDPleaderseventuallyreachedaconsensusontheneedtoincreasetaxes,butfailuretoconvincethepubliccontributedtotheLDP’sdownfall.

Key words:Japan,fiscalpolicy,policyreform,politicalparties,delegation

SpecialIssue:Onstructuraldevelopments,Koizumireforms,andthecollapseofLDPrule

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crisis.YetincomparisonwithexpansionaryspendinginChina,theUnitedStates,andmostofWesternEurope,andconsideringthemagnitudeoftheeconomicshock,thetwosupplementarybudgetsforFY2009andtheFY2010budgetasrevisedbytheincomingDemocraticPartyofJapan(DPJ)administrationremainedfairlymodestinsize,andtheylargelyavoidedrelianceonpublicworksandotherparticularisticspending(Noble2010). TotheextentthatobservershaverecognizedthissuccessinrestrainingexpendituresinJapanatall,theyhavetendedtoascribeittostructuralpoliticalandadministrativereformsdatingbacktothemid-1990s,andespeciallytoPrimeMinisterKoizumiJun’ichirō’scleveruseofthenewadministrativemachinerytoovercometheforcesofresistanceintherulingLiberalDemocraticParty(LDP)andthebureaucracy.Thisapproachprovidesagoodstart,butitdoesnotexplainwhytherestrictivetrendscontinuedevenunderthemuchweakerandlesseffectiveprimeministerssucceedingKoizumi.Directassertionofleadershipbytheprimeministerandcabinet,itseems,wasnotsufficient. Theconventionalframeworksettingtheprimeministeragainstthe“forcesofresistance”inthecommitteesoftheLDP’sPolicyAffairsResearchCommittee(PARC),alongwithalliedinterestgroupsandbureaucraticagencies,missesacrucialdimensionofconflict:themixtureofsparringandcoordinationcarriedoutbyseniorLDPmembersintermediateinpowerandinfluence between the prime minister on the one hand, and the “zoku” (policy tribe) DietmembersinthePARCandtheirfollowersontheother.LeadingmembersoftheLDPwithparticular interest in economicpolicy alliedwithprogressive elements of thebureaucracy,particularlytheMinistryofFinance(MOF)andtheMinistryofEconomy,TradeandIndustry(METI),aswellascabinet-orientedpartsofotherministries,topushforfiscalreconstruction,includingbothexpenditurecutsandanincreaseintheconsumptiontax.Thisuniondidnotsimplyrepresenthiddenbureaucraticinfluence—politiciansandbureaucratsoftenconflictedand the bureaucrats did not necessarily win—but they generally saw eye to eye on keybudgetaryissues.OtherinfluentialLDPmembersmoresuspiciousofthebureaucracyreliedonoutsidersorahandfulofrenegadebureaucratsandresistedcallstoincreasetheconsumptiontax.Thetwosidesagreed,however,onthepressingneedtorestrainspending,especiallynon-welfarespending.Eventuallythepro-taxsidewonthebattleofpolicymakers—buttheninthe2010HouseofCouncillorselectionsthepoliticiansfailedtopersuadethevotersoftheircase,leavingJapanesepublicfinancesinperilousshape,despitetherelativerestraintinexpendituresandtheemergingeliteconsensusonthenecessityforincreasingtaxes.

Budgetary outcomes in the 2000s

After markedly improving in the mid-2000s, the ratio of tax revenue to expendituresdeterioratedsharplyafter2008astheglobalcrisishammeredtheeconomy,leavingthecentralgovernmentdependentonbondsformorethanhalfofitsrevenue(MinistryofFinance2010:

Political-bureaucraticalliancesforfiscalrestraintinJapan

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(2) Trends in General Account Tax Revenues, Total Expenditures, and Government Bond Issues

2.1 3.5 4.5 4.3 6.3 7.2 5.9 7.0 6.7 6.4 6.0 5.02.5 4.1 4.8

11.08.5

24.321.9 20.9

25.828.7 26.8

23.521.1 19.3

26.2

38.4 38.0

3.23.7

5.0 6.37.1 7.0

7.0 7.0 6.8 6.4 6.3 6.26.9

6.2 6.4 6.3 6.79.5

16.212.3

16.4

10.79.9

17.0

13.2

11.19.1

9.16.7 8.7

7.8

6.46.0

7.0

15.0

6.4

0.21.0

17.01.0

13.815.7

17.3

21.923.7

26.929.0 30.5

32.434.9

38.241.9

46.8

50.8

54.9

60.1 59.8

54.4 54.151.0 51.9 52.1

53.9

49.447.2

50.747.9

43.8 43.345.6

49.1 49.151.0

20.924.5

29.1

34.1

38.8

43.446.9 47.2

50.6 51.5 53.0 53.6

57.761.5

65.969.3 70.5 70.5

75.1 73.675.9

78.8 78.5

84.4

89.0 89.3

84.8 83.7 82.484.9 85.5

81.4 81.8

102.6

5.37.2

9.6 10.713.5 14.2

12.9 14.0 13.5 12.8 12.3 11.39.4

7.2 6.6 6.79.5

16.2 16.5

21.2 21.7

18.5

34.0

37.5

33.0

30.0

35.0 35.3 35.5

31.3

27.525.4

33.2

53.5

44.344.3

36.9 37.4

84.7

92.3

7.3

0

20

40

60

80

100

120

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(FY)

(Trillion yen)

(Note 1) FY1975-2008: Settlement, FY2009:Second revised budget, FY2010: Initial budget(Note 2) Ad-hoc deficit-financing bonds (approx. 1 trillion yen) were issued in FY1990 as a source of funds to support peace and reconstruction efforts in the Persian Gulf Region.

Total Expenditures

Tax Revenues

Construction Bond Issues

Special Deficit-FinancingBond Issues

2

(3) Government Bond Issues and Bond Dependency Ratio

2.1 3.5 4.5 4.36.3 7.2 5.9 7.0 6.7 6.4 6.0 5.0

2.5 1.04.1 4.8

11.08.5

24.321.9 20.9

25.828.7

38.0

3.23.7

5.0 6.3

7.1 7.07.0

7.0 6.8 6.4 6.36.2

6.96.2 6.4 6.3 6.7

9.5

16.2

12.3

16.4

10.7

9.9

17.0

13.2

11.19.1

9.16.7 8.7

7.8

6.46.0

7.0

15.0

6.4

17.0

38.4

26.2

21.1

26.823.5

19.3

0.2

1.0

32.6

26.624.8

23.2

21.0

48.0

16.3

25.3

32.9

31.3

34.7

39.2

31.0

41.841.842.9

36.9

23.5

27.628.0

11.6

10.1 10.69.5

13.5

21.5

22.4

40.3

35.436.6

33.7

27.5

29.7

42.1

52.1

29.4

5.37.2

9.610.7

13.5 14.212.9

14.0 13.5 12.8 12.311.3

9.4

7.2 6.6 6.7

9.5

16.2 16.5

21.2 21.7

18.5

37.5

33.0

30.0

35.033.2

44.3

34.0

53.5

25.4

31.3

35.3 35.5

27.5

7.3

0

10

20

30

40

50

60

75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10(FY)

(Trillion yen)

0

10

20

30

40

50

60(%)

Ad-Hoc Deficit-Financing Bonds

Construction Bonds

Special Deficit-Financing Bonds

Bond Dependency Ratio (right axis)

Government Bond Issues (left axis)

(Note) FY1975-2008: Settlement, FY2009: Second revised budget, FY2010: Initial budget

3

　　　　http://www.mof.go.jp/english/budget/e20091225b.pdf.Sources:MinistryofJapan,“Japan'sFiscalSituation(December25,2009)”


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4). Japan’s fiscal condition is indeed grim. Net government indebtedness is well over 100percent,worsethaninanyotherOECDcountry(OECD2010a).UnlikethecaseinfinanciallytroubledEuropeancountriessuchasGreeceandItaly,Japan’sdomesticsavingsaresufficientto absorb government deficits, and interest rates remain low, but at some point decliningdomesticsavingsandincreasedinterestratescouldputtremendouspressureonbudgets,andpossiblyigniteacrisisofconfidence. Japan’sfiscalwoesarenotprimarily the result ofunrestrained spendingbyprofligatepoliticians.GovernmentspendingasashareofGDPisamongthelowestintheOECD:in2007(the latest year for which comparable data are available), total expenditure of generalgovernmentasapercentageofGDPwas36.01percent—slightlylowerthanthatoftheUnitedStates,andfarlowerthaninmostEuropeancountries(OECD2010b).Instead,weakeconomicperformance and deflation have depressed revenues and created “reverse bracket creep.”NeitherinJapannorabroadistherefullrecognitionofthemagnitudeofthetaxcollapse.Afterclimbingsteadilyandrapidlyfordecades,taxrevenuesinthegeneralaccountbudgetpeakedat60.1trillionyenin1990.Theydeclinedbyalmostathirdto43.3trillionyenin2002,andthenrecoveredto51.0trillionyenin2007,beforeslumpingtoadisastrous36.9trillionyenin2009(MOF2010). Totheextentthatpressurestoexpandspendingincreased,theyreflectednotincreasedwasteorper-capitagenerosity,buttheagingofthepopulation.Fromthelate1990stothelate2000s,theshareofpublicworksinGDPdeclinedbyoverhalf,andthegovernment’sspendingonagriculturedeclinedbyalmostasmuch.Defensespendingstagnated,educationspendingdeclinedsignificantlyasthenumberofschoolagechildrendropped,andforeignaidplunged.Pension benefits, healthcare coverage and reimbursements to physicians all shrank, whilepensionandhealthpremiumsincreased,butbecauseoftherapidagingofthepopulation,socialwelfare spending jumped from35percentageof thebudget in2000 to48percent in2008.(Noble2010:247-251).

Sources of fiscal restraint: Structural Reforms and the Koizumi-Takenaka Team

Totheextentthatrestraintinexpendituresisrecognizedatall,ittendstobeattributedtotheincreasedstrengthoftheprimeministersincetheelectoralandadministrativereformsofthe1990s,andparticularlytheconfluenceofstructuralreformsandskilfulleadershipunderPrimeMinisterKoizumi(2001-2006)(Fujimura2009;Uchiyama2007;Shimizu2005).Electoralandcampaignfinancingreformweakenedtheinfluenceoffactions,strengthenedthepoweroftheprimeminister,andcontributedtoconsolidationofthepartysystem,creatingagenuinealternative to the LDP (Rosenbluth and Thies 2010, Köllner 2009). Elections increasinglybecameasimultaneouschoiceofparty,platform,andprimeministerialcandidate(政治改革推進協議会（民間政治臨調）1996). The end of the cold war and of the bubble economy, and the


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increase in uncommitted “floating voters” at the expense of “organized voters” furtherstrengthened themove away from particularistic politics and factionalized clientelism andtowardamoreprogrammaticorientationtopolicy(Noble2010).Strengtheningoftheprimeministerandcabinet(Shinoda2005)andcreationoffourkeyadvisorycouncilsundertheprimeministerincreasedthecapacityofpoliticalleaderstoprovidemorecoherentpolicies. PrimeMinisterKoizumimadeparticularlygooduseoftherevampedinstitutions.Koizumicraftedeffectivepoliticalmanifestos,effectivelywieldedthethreatofparliamentarydissolution,andkeptfirmcontrolovercabinetandotherpersonneldecisionsonceleftlargelytofactions.Hemobilizedcharm,abilitytocraftboldanddecisive-soundingsoundbites,andskilfuluseofa wide range of news and information media to advance his agenda of structural reformagainstopponentshecannilydesignatedas“forcesofresistance.” AcrucialweaponwastheCabinet’sCouncilonEconomicandFiscalPolicy(CEFP),whichcameintoexistencejustmonthsbeforeKoizumiassumedofficeaspartofthereformscraftedinthe1990sbyPrimeMinisterHashimotoRyūtarō.Koizumisettheagendaandbroadlinesofpolicy,thendelegatedauthorityforeconomicpolicytoone-timegovernmentpolicyanalystandKeioUniversityprofessorTakenakaHeizō, theonlypersonto lastthroughall threeof theKoizumicabinets(Takenaka2008).KoizumigaveTakenakahiscompletetrust,andTakenakainturnprovidedabsoluteloyalty,runningfortheHouseofCouncillorsin2004whenKoizumiaskedhimtoincreasehispoliticalheft,andretiringfromtheDietinmid-termwhenKoizumifinishedhistenureasprimeminister.Takenakacombinedacademicexpertise,extendedstaysatleadingAmericanuniversities,andyearsexperienceworkingintheeconomicbureaucracy.Hebuiltasmall,ideologicallycompatibleandintenselyloyalteam,andstrovetoreducetheinfluenceoftheministries. Thefour“private”membersoftheCEFP—twoeconomistsandtwobusinessexecutivesfromleadingfirmsinsuchexternallyorientedsectorsasautomobiles,electronicsandtrade—servedasavanguard,pushingthepolicyenvelope.Theprivatemembersquicklyovercametheirdifferencestoforgeaunitedfront,seizingcontrolofthepolicyagendawithprovocativeandunanimouslysigned“privatemember[policy]papers.”Theystressedtheimportanceoftransparencytoneutralizetheinformationasymmetrytypicallyfavoringthebureaucrats,andproddedreluctantministriestoestablishspecifictimetablesandnumericaltargets(Ota2006:124-127).TheCEFP under StateMinisterTakenaka forced theministries and agencies toprovide counter-offers rather than merely veto uncongenial proposals, and after intensiveeffortsatpersuasion,lettheboldandpopularprimeministermakethefinaldecision,typicallyfavoringfurtherreforms(Takenaka2008:224-225). TheCEFPunderKoizumi andTakenaka overcame the opposition of bureaucrats andbackbenchpoliticianstoachieveanumberofcrucialbreakthroughs,manyofwhichdirectlyorindirectlyreducedpressureongovernmentspending.TheCEFP:1.ControlledthedirectionofthebudgetandtheFiscalInvestmentandLoanProgram(FILP)or “second budget,” overcoming resistance from bureaucrats, interest groups and LDP


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backbencherstoinflictsignificantcutsinpublicworksandhealthcare(vialowerreimbursementsto doctors; increased co-pays, and increased contributions); and squeezedpensions (sharplyhighercontributionratespluslowerfuturepayments).2.Forcedbankstocastofftheirnon-performingloans(overresistancefrombanks,andtheMinistryofFinance,andsuchborrowersasbigretailersandtheiroverseerMETI).3.ForcedtheBankofJapantoswitchmoreamoreaccommodatingmonetarypolicytocombatdisinflation(CargillandSakamoto2008:142-143)4.Consolidatedandprivatizedgovernment-ownedfinancialinstitutions(againstthestrenuousoppositionoftheMinistryofFinance,whichplacedmanyofitsformerofficialsincushypost-retirementamakudaripositionsatthebanks).5.Beganprivatizationofthepostalsystem(includingthegiganticpostalsavingsandinsurancesystems),despitestrenuousoppositionfromtheMinistryofInternalAffairsandCommunication(MIC)andbackbenchpoliticians.6.Cutsomedisbursementstolocalgovernmentsinreturnforturningoveraportionoftaxrevenues, and consolidated many small local governments, both over the opposition of areluctantMICandagainstthewishesofmanylocalgovernments.

Beyond the powerful prime minister

The preceding explanation is fine as far as it goes, but it is incomplete: control ofexpenditurescontinuedevenunderKoizumi’sthreeweaker, lesseffectiveandshorter-livedLDPsuccessors,whofailedtomatchKoizumi’sappealandstrategies(Shimizu2009;Takenaka2008,pp.225-232).Koizumi’ssuccessors--Failedtoproduceboldmanifestoswithconcreteandimmediategoals.--Didnotmakegooduseofcontroloverpersonnelordelegateclearlytoonechiefeconomicadvisor;instead,theytriedtobalancecabinet,factions,andforceswithintheLDPratherthannamingfiguresreliantonthemselves.--ReliedontheelectoralmajorityleftoverfromKoizumi’shistoricvictoryinthe2005HouseofRepresentativeselectionratherthandaringtoseekownelectoralmandatesviaparliamentarydissolution.AndyettightcontroloverbudgetaryexpendituresandtheFILPprogramcontinued,withonlyamodestrelaxationaftertheglobalfinancialcrisisin2009,andeventhatresponsedifferedfundamentallyfromtheparticularisticpump-primingofthelate1990s. Each ofKoizumi’s threeLDP successors lacked crucial skills or committed significanterrors,andthelasttwowerehobbledbytheopposition’sseizureofcontroloftheupperhouseinthe2007HouseofCouncillorselections.Eachlastedbutayear.PrimeMinisterAbeoccupiedhimselfwithdistantandunrealisticgoalsoflittledirectappealtovoters,suchasconstitutionalrevision,failedtosetconcreteshort-termgoals,andmadenumeroustacticalerrors.Ideologically,


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AbewasclosesttoKoizumi,buthelackedKoizumi’shard-earnedreputationasaprincipledandtenaciousreformer,andKoizumi’sfeelfortheconcernsoftheelectorate,lurchingfromagenericconservatismtoapositionfartotherightofthemedianLDPlegislator,muchlessthevotingpublic(KabashimaandOokawa2006).InsharpcontrasttoKoizumi’scareinpersonnelselection,Abe’sfailuretovetcabinetpickscarefullyledtoastreamofgaffesandscandals,andcriticism that he relied on a “cabinet of friends.” The revelation on Abe’s watch that thegovernmenthadlosttensofmillionsofpensionrecordsmostlyreflectedbadluck,sincetheproblemsdatedbackdecades,butAbedidnotrespondeffectivelytothepublic’sunderstandablefearandoutrage.Aboveall,hisdecisiontoacceptbackintotheLDPthe“postalrebels”whohaddefiedKoizumioverpostalprivatization in2005andhadbecomesymbolsof the “old”LDP’sunwillingnesstoreform,turnedouttobeadisastrouserror(Shimizu2009:156-175). Abe’ssuccessorFukudaYasuowaslesscommittedtoneo-liberalreformthanKoizumiandAbe,andcouldnotmatchKoizumi’sskillatcommunication.Thesonofaformerprimeminister,Fukudahadbeenaneffective“insider”asChiefCabinetSecretaryunderKoizumi,andhewasmoresensitivetotheimmediateconcernsofvotersthanwasAbe,asseeninhisdetermination tocreateanewconsumerprotectionagency,buthewasoldand lacking incharismaandpublicspeakingskills.LDPbackbenchersquestionedhisabilitytowinelections(Asahi Shinbun,September17,October2,2007).Fukudafailedtocraftanewmanifesto,andcarriedoveralmosttheentirepreviouscabinetfromAbe,ratherthancreatinganewteamandindependentimage.Especiallytellingwashisbotchedattemptstocreatenewsloganstosummarizehispolicydirection,borrowingmuchofhisterminologyfromtheoppositionparties,and then repeatedly mangling the wording in public (Shimizu 2009: 257-258). Attempts toconveyasenseofmodestyandcircumspection(suchasdescribinghispoliticalsituationas背水の陣[forcedtofightalast-ditchbattle])onlymadehimsoundweak. Finally, Fukuda’s flighty successor Asō Tarō repudiated the signature stances of the“Koizumistructuralreform”agendaonpostalprivatizationandfiscalreconstruction, joiningtheresurgenceofpro-expendituregroupsintheLDP(Nihon Keizai ShinbunAugust6,2008).The word “reform” literally disappeared from Aso’s campaign posters (Asahi Shinbun September 25, 2008). Aso’s repeated misreading of Japanese expressions exposed him toridiculeandunderminedhisreputationforseriousnessandcompetence. Koizumi’ssuccessorsstruggledtodealwiththebacklashagainstfiveyearsofvigorousreformunderKoizumi,including“reformfatigue,”scandalsattributed,withvaryingdegreesofplausibility,tothederegulationcarriedoutunderKoizumi,andthewidespreadimpressionthatKoizumi’s policies had contributed to a rapid increase in economic inequality in Japanesesociety.Mostimportant,theopposition’svictoryinthe2007HouseofCouncillorselectiongavetheDPJapreciousincreaseinperceivedlegitimacyandseriousness,andhobbledthepolicyinitiativesoftheCEFPandtheLDP,sincetheupperhousecouldvetoalllegislationexceptbudgetsandtreaties.Infact,animportantreasonthatFukudacameacrossassomuchlessresolute than Koizumi was his repeated, and ultimately fruitless, efforts to craft a grand


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coalitionwiththeDPJtoovercomethegridlockcausedbydividedgovernment,suchastryingtogarnertheDPJ’ssupportfortheU.S.militaryeffort intheIndianOcean,andapossibleincreaseintheconsumptiontax. Insum,primeministerKoizumi’shaplessandunluckysuccessorsstillmanagedtopresideover continuing budgetary stringency, and even succeeded at passing some legislativebreakthroughs, suchasFukuda’s creationof theconsumerprotectionagency, even thoughtheylackedmanyofKoizumi’sskillsandfailedtoimitatehiscleveruseofthepowersoftheprime ministership created by the 1990s reforms. The “structural reform” explanation isnecessary,butnotsufficient. Moreover,itistellingthatevenKoizumireliedfarmoreonthebureaucracy,andnotjustnewinstitutionssuchastheCEFP,thantherhetoricoftheTakenakateamandmuchofthepresscoveragewouldleadonetobelieve.Takenaka(2008:124-126)andhischiefassistant,OtaHiroko(2006:250-252)emphasizethegalvanizingroleoftheCEFPandparticularlyitsprivatemembers,andexpresssuspicionandevenhostilitytowardstaffsecondedfromthebureaucracy,buttheilluminatingaccountbyKoizumi’slong-timepoliticalsecretaryIijimaIsao(2006)makesclearthattheKoizumiadministrationrelieddeeplyonaselectgroupofsecondedbureaucrats.Dependence on support from bureaucrats was especially crucial in Koizumi’s last year:opponentsintheLDPwereeitherdefeatedorcowedbyKoizumi’sgreatvictoryinthe2005election,whileTakenakarelinquishedcontrolover theCEPFtooversee implementationofpostalreformatMIC.KoizumientrustedtheCEFPtofiscalconservativeYosanoKaoru,whopledgedtoworkwith,ratherthanagainst,therulingparty.ItistruethatAbe,Fukuda,andAsotosomeextendcoastedonthebudgetaryoutlinessetoutunderKoizumi,butthecrucialcompromises were forged under Yosano in the “unified expenditure/revenue reform”incorporatedinthe2006“Honebuto”(bigboned)programforeconomicmanagement(CEFP2006).

Reconsidering relations between politicians and bureaucrats: beyond strict delegation

Untilthelate2000s,analysesofJapanesepoliticsincreasinglystressedpoliticalcontrolofthe bureaucracy. Whereas scholars in the immediate post-war decades focused on thedomination of policymaking by bureaucrats and the limitations of Japan’s new democracy(Tsuji1969),bytheearly1980s,apositiveaffirmationofpluralismasserteditself.Surveysfoundthatbothbureaucratsandpoliticiansviewedthelatterasthemostimportantplayersinthepolicyprocess(Muramatsu1981).Drawingonmassesofinternalpartydocuments,SatōandMatsuzaki(1986)showedthattheLDPhaddevelopedastablesenioritysystem,andthatitsleadingpoliticiansplayedanactiveroleinpolicy.ExtendingtheworkofAberbach,PutnamandRockman(1981)onwesterndemocracies,theyproclaimedthatpoliticiansandbureaucratsinJapanhadmergedintoanew“hybrid.”InoguchiandIwai(1987)concurred,highlightingthe


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active role of LDP politicians in distributing political resources. Japanese policymaking, itseemed,hadbecomedemocratic,pluralistic,andhighlyresponsivetopartypolitics,ifstillnotquiteasfreewheelingasintheUnitedStates. After1989,theLDP’s lossofcontroloftheUpperHouseandfrom1993-1994eventheHouseofRepresentatives,anditsconsequentdependenceoncoalitionpartnersconfirmedtheideathatpolitics,notbureaucracy,heldthekeytoJapanesepolitics(HiwatariandMiura2002).Atthesametime,widespreadreportingoftheputativefailingsoftheministriesquietedtalkofbureaucraticdominance:theburstingoftheeconomicbubblein1990,scandalsinvolvingtheministries of finance and health, the perceived failure to deal effectively with the KobeearthquakeandthesubwaypoisoningattacksoftheOumShinrikyōsect,theinabilityoftheFinanceMinistrytopreventthecollapseofnumerousfinancialinstitutionsandtheaccumulationof bad loans, and above all the prolongation of deflation and slow and erratic growth allunderminedthereputationofthebureaucracy. Principal-agentmodelsdevelopedelsewherealsobegantoinfluencestudiesofJapanesepolitics.Theassentofpoliticiansisneededtopasslegislationandbudgets,andscholarsexploredanincreasinglywidevarietyoftechniquespoliticianscouldusetoinfluencethebehaviorofbureaucrats, includingscreening,directand indirectmonitoring (includingprovisionof “firealarms”),andcontroloveradministrativeprocedures,agencybudgets,andcareeropportunitiesavailable to bureaucrats (Miller 2005). Ramseyer and Rosenbluth (1993) found significantevidencethatmanyofthesetechniqueswerealsoatworkinJapan.McCubbinsandNoble(1995) showed that Japanese budgets, far from being rigid and incremental, responded tofluctuationsinthegoalsoftopleadersandthesizeoftheLDPcontingentintheDiet.Masuyama(2003), followingCox andMcCubbins (1993), argued thatLDP leaders guidedpolicymakingthroughtheircontrolovertheDiet’sagenda. Just as the “mepoliticalprincipal, youbureaucratic agent” approachbecameacceptedwisdominJapan,theliteratureinthewestgrewmorecomplexandsophisticated,emphasizingvariationsinthetypeandbreadthofdelegation,andthevaryingresourcesavailabletobothpoliticiansandbureaucrats,nottheleastthefactthatbureaucratshaveamassiveadvantagein numbers, experience, expertise and continuity. Many analysts applied the economics ofindustrial organization and transaction costs to political arrangements, concluding thatpoliticianswillnotdevoteunlimitedresourcestowritinglegislationormonitoringbureaucrats,butwillcompareinternalcosts(producinglawsandregulationthroughlegislativecommittees)totheexternaltransactioncostsinvolvedwithdelegationtobureaucracy.Politiciansaremorelikely todelegate, forexample,underunifiedrather thandividedgovernment (EpsteinandO’Halloran1999).HuberandShipan(2002)arguedthatthedegreeofdelegationdependsuponthe character of the issue (for example, how conflictual or technical); the availability ofalternativessuchascourtsorfederalism;andthecapacitiesofpoliticians(especiallyministers)andlegislatures(e.g.time,salaries,andcommitteesystems).Similarly,AlesinaandTabellini(2007)predictedgreaterdelegationwhenthepolicymakingiscomplexoruncertain,andless


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whenthecontentinvolvesdistributingvaluableresourcestospecificclients. Arelatedstrainofresearchpointedoutthatpoliticianssometimesdeliberatelyforsakepolitical discretion in the presence of time-inconsistency, short-termism, and strong vestedinterests(AlesinaandTabellini2008).Thetrendtowardmoreindependentcentralbanksisafamousexample (AlesinaandSummers1993,butseealsoHallettetal. 2009on limitationsarising from interactions with fiscal policy). Independent regulatory agencies, once limitedlargely to the United States, have spread to Europe and even Japan, partly via diffusionmechanisms, but alsobecauseof their ability to increase credibility andbind thehandsofsuccessors (Gilardi 2008). Politicians may even deliberately tie their hands and limit theirdiscretionsoastoincreasetheirbargainingleveragewithotherplayersorothercountries(Miller2005). Morerecentlyandintriguingly,politicalscientistshavenoticedthatbureaucratsarenotsimplyagentswithsignificanthands-oninformationandexpertise,butpoliticalplayerscapableofmobilizingformidablepoliticalresourcesoftheirown.InSwedenandothersocialdemocraticcountries, public sector unions are major supporters of leading political parties. Even inAmerica,unionsofteachers,prisonguardsandotherpublicemployeescanmobilizesignificantnumbersofvotersandcontributors(Moe2006;Zimringetal.2001).Agenciesalsooftensitatthe nexus of interest groups, academics and professionals involved in the policy process.Carpenter(2001)demonstratedthattheAmericanpostofficeandDepartmentofAgriculture(thoughnotsomuchtheDepartmentoftheInterior)wereabletoprovideuniqueservicesthatcaused related interest groups to rally around the agency and protect against hostile orindifferentpoliticians.Similarly,PresidentRonaldReagan’sabilitytouseappointmentpowerstoreinintheEnvironmentalProtectionAgency(EPA)wasslowedandlimitedbytheEPA’snetworkofsupporters(WoodandWaterman1994). Insomecases,bureaucraciescanusetheirinformationadvantageandimageofbeinglesscorruptthanpoliticianstoswaylargerswathsofpublicopinion.RobertMoses,forexample,usedhiscontroloveranindependentincomestream(bridgeandroadtolls)todominatepublicconstructioninNewYorkfordecades,lastingthroughfivemayorsandsevengovernors,untilhelostcontrolofpublicopinionintheearly1960sandwaspushedaside(Caro1974).Inadditiontomobilizingpositiveopinionontheirownbehalf,bureaucratscanleakdamaginginformationto discredit their political “masters,” as lightly fictionalized in the famed British televisionseries “Yes, Minister” (Makihara 2003:17-18). Finally, on occasion, bureaucrats can unleashagainstpoliticalopponents(andtheirsupporters)thecoercivepowersofthestate,suchastaxaudits,regulatoryinvestigations,andprosecutions. By the 2000s, as the economy continued to flounder despitemassive budget stimuluspackages, similarobservationsproliferated in Japan.Lossof confidence in thebureaucracygavewaytolargerquestionsaboutpoliticalgovernance.Scholarsincreasinglyquestionedthepowerof theprimeminister toovercomenot just thebureaucracybutalso thepluralisticforcesintheLDPthatoftenalignedwithindividualministriestodemandresourcesandresist


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callsforstructuralchange.TheHashimotoandKoizumireformscreatedsomeoptimism,butevenKoizumi’ssubordinatesandsupportersexpresseddoubtsthatstructuralreformwouldsurvivehisretirement(Takenaka2008:225-232).Manyscholarsagreedthatpoliticaldirectionremainedweak.IioJun’s(2007)award-winningbookpointedtocontinuingweaknessesinthequalityofministersanddeliberation inbothDietandcabinet.Despitesome improvementsafterelectoralreform,henotedthatbureaucracyremaineddeeplyembeddedwithproducerand other social groups. Bureaucrat-scholar Nakajima (2007) and prominent LDP figureNakagawaHidenao(2008:31)expressedevengreaterskepticism. By the2009and2010elections, the insurgentDPJ,LDPconservatives, and journalists(Shimizu2009)joinedtogetherindecryingtheweaknessofJapanesegovernanceandcallingforgreaterpoliticalleadership.ConservativessuchasNakagawa(2008)andTakahashi(2008)assailedthebureaucracy’suseof leaks, informationfreezes,andsabotage.ForeignMinistryofficials, for example, used information leaks to discredit Koizumi’s first Foreign Minister,TanakaMakiko (Ehrhardt2009: 636).During thepostalprivatizationdrive,PrimeMinisterKoizumi even sacked two MIC officials for carrying out secret negotiations with LDPbackbenchers(Takenaka2008:183).Nakagawa(2008:33-35)assailedbureaucratsformobilizinginterestgroupsand localgovernments topressurepolitical leaders.Rather thanpoliticiansdeterminingthepromotionofbureaucrats,hecharged,bureaucratswereabletomanipulatethe imagesand thuscareerprospectsofpoliticians.Nor,heclaimed (Nakagawa: 56-64)didbureaucratsintheMinistryofFinanceandelsewherehesitatetousetaxauditsandregulatorypowersagainstreportersandothersperceivedtobeunsympathetictobureaucraticinterests.Doubts even emerged about the independence of prosecutors. Johnson (2002) showed thatprosecutorswereevenmoreimmunefromoversightinJapanthaninmostotheradvanceddemocracies, though he argued that in general they handled their discretion responsibly.FormerForeignMinistryofficialSato (2010),however, claimed thatbureaucrats selectivelyprosecutedcertainpoliticiansandpartieswhileleavingmorepliablepoliticiansalone(fortheinteractionbetweenleaksbyprosecutorsandpliablenewsmediaintherun-uptothe2009House ofCouncillors election, see alsoNew York Times,May 28, 2009).The conclusion ofNakagawa(2008:35):bureaucratsstillwieldoverwhelminginfluenceinpolicymaking. In sum, while the claim that delegation to the bureaucracy amounts to out-and-outabdicationisimplausibleinanelectoraldemocracy,andplentyofcomparativestaticsevidencesuggeststhatchangesinpoliticalarrangementsleadtochangesinpolicyoutcomes,andarenotjuststymiedbybureaucraticresistance,logicandconsiderableevidenceprovidereasonsto believe that politicians often prefer fairly loose delegation and on occasion will evendeliberatelycreatestrongbureaucraticcontrol,notleastviatheMinistryofFinance.Moreover,theassumptionthatpoliticiansholdanabsoluteadvantageinpoliticallegitimacyandlegislativecontrol over their bureaucratic agents can be exaggerated: the resources available tobureaucrats include not only information, expertise, hierarchical control and institutionalcontinuity, but also legitimacy, extensive contactswitheconomicand socialgroups, andat


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timesevensignificantelectoralmobilizationcapacity.TheseresourceshelpexplainhowleaderswithintheLDPcoulduseallianceswithpartsofthebureaucracytocontrolspendingevenunderweakerprimeministers.

Beyond the prime minister: influential LDP MPs and alliances with the bureaucracy

DespitetherhetoricoftheDPJelectoralmanifestos(DemocraticPartyofJapan2009),inJapan as elsewhere, policymaking conflict rarelyneatlypits politicians against bureaucrats(Aberbach, Putnam, and Rockman, 1981: 252). Normally, one set of politicians, relatedbureaucrats,andalliedinterestgroupsconfrontsotherclustersofpoliticians,bureaucrats,andinterests.Traditionally,subgovernmentsandirontriangleswereespeciallyperniciousinJapanbecauseoftheinternalpoliticalcompetitionresultingfromthe“medium-sizedconstituency”orSingleNon-TransferableVote(SNTV)electoralsystem(Campbell1984).Asnotedabove,theelectoralandcampaignreformsof1994diminishedinternalconflict,underminedfactions,andstrengthenedparty labels andprimeministers as party leaders.Despite thedramaof theKoizumiyears,however,policymakingdoesnotjustrevolvearoundaconflictbetweenprimeministers and the pluralistic “forces of resistance,” but often includes conflict over policydirectionandbalanceacrossspendingprograms.Theseconflictsarenotnew,buttheygrewinrelativeprominenceasfactionsandzokuleadersweakened.Backinthe1980s,SatoandMatsuzaki(1986:50-51,97)notedtheimportanceof“influentialDietmembers”有力議員withseniority(twoormoretermsinthecabinetor“topfour”partyposts)and(unlikemerezoku)aplausible claim to expertise and influence in multiple policy areas. Influential membersdemonstrate their status (and suitability for future positions, including prime minister) byrestrainingtheirowndemands, imposingdisciplineonjuniormembers,andbrokeringdealsacrosspolicyareas.EvenamongzokuDietmembers,InoguchiandIwai(1987)distinguishedbetween “hunting dogs” that constantly sought new resources for themselves and theirfollowers, and “guard dogs” (猟犬/番犬). After the structural reforms, influential memberswithouttheirownfactionsplayedanevenmoreimportantrole.

Major axis of conflict: Consumption taxes

AftertheaccessionofPrimeMinisterKoizumi,thegreatestconflictineconomicpolicycenteredonwhether,when,andhowmuchtoraisetaxestocovertheyawningbudgetdeficit.Theweaknessoftheeconomyandfearsofintensifieddeflationservedtodelaycallsfortaxincreases,asdidtherepeatedsetbackstheLDPhadexperiencedwhenitproposed,passed,andlaterincreasedtherateoftheconsumptiontax.Thebusinesscommunity,wellrepresentedthroughthepeakassociationNipponKeidanrenandtheCEFP,arguedthatthehighestpriority


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wastostimulatedomesticinvestmentbycuttingcorporatetaxes,sinceprofitablebigcompaniesfacerelativelyhighrates,especiallycomparedtothoseofneighboringAsiancountries.PrimeMinister Koizumi flatly declared that he would not raise the consumption tax during histenure,whichreassuredconsumersandinvestors,butalsopostponedtheproblem. Policymakerspaidrelativelylittleattentiontogainingmorerevenuefromfarmers,small-businesses,andmiddle-classtaxpayers,eventhoughJapan’staxbasewasnarrowerthanthatofotherleadingdemocracies(Steinmo2010).ProfessorIshiHiromitsuoftheGovernmentTaxCommittee,anadvisorycouncilundertheMinistryofFinance,proposedimplementationofa“standard”corporatetaxonvalueaddedandinvestedcapitalinordertocapturerevenuefromthetwo-thirdsofcompaniesreportinglosses.PrimeMinisterKoizumihadspokeninfavorofwideningthetaxbase,andProfessorHonmaMasaakiandtheprivatemembersoftheCEFPwerenotopposedinprinciple,buttheCEFPdoubtedthatthemeasurewouldbringinmuchrevenueand thebusiness sectorwasbitterly opposed.Whenawatered-down systemwasfinallyintroducedin2004,itappliedonlytocompanieswithcapitalofatleast100millionyen,andtheCEFPturneditsattentionbacktocuttingcorporatetaxrates(Ota2006:180-187).In2003,theKoizumiteamintroducedsomeminor“policytaxcuts”oncorporateandpersonalincometaxrates,butafterthattaxpolicychangedrelativelylittle(Ota2006:193-196),apartfromsome inadvertentreversebracketcreepthat furthercut intorevenues.Ontheotherhand,theKoizumiadministrationalsoimplementedsomesignificantincreasesinsocialsecuritycontributionsandhikedco-paymentsbypatients,effectivelyshiftingsomeofthetaxburdenfromcorporationstohouseholds.

Tax cutters

TaxaversiondominatedtheKoizumiadministrationandremainedapowerfulmovementunderhis successors. In 2005, theprivatemembers of theCEFPset out a framework for“integratedexpenditure/revenuereform,”includingthreeunderlyingprinciples(CEFP2005):smallgovernment;vitality(includingcross-generationalequity);andtransparency.Ofthese,themostimportantwas“smallgovernment,”andTakenakarepeatedlydeclared,“Iamtheministerfor smallgovernment” (Takenaka2008:211, 225-232).Policymakers tried to stimulatemorerapid growth, and made optimistic (or unrealistic) assumptions about its likelihood. Theyfocusedonmicroeconomicreformssuchasderegulationaswellasmacroeconomicpolicy,andaimedforamoderatelyhighnominalgrowthrate;thatis,theywereimplicitlywillingtouseamoderateamountofinflationtoeatawaythegovernment’sdebts.Advocatesoflowertaxestendedtostartwiththemaximumacceptabletaxburden,thenfiguredoutexpenditurecutsnecessarytomaintainthem(Ota2006:123-165).Themainthrustwasclear:cutcorporateandothertaxestotheextentpossible,andrelyonacceleratedgrowthandcutsinexpenditures,includingsocialsecurity,tocontrolthedeficit. InadditiontoKoizumiandTakenaka,prominentadvocates includedtheCEFPprivate


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members ledbyProfessorHonma,whohadoncerecruitedTakenaka toOsakaUniversity(Shiota2005).Theprivatemembersdidnotalwaysagreeonneo-liberalprinciples—ProfessorYoshikawaHiroshiofTokyoUniversityhadstudiedunderthe famedKeynesianeconomistJamesTobinatYale—andatfirsttheytriedtoimplementadivisionoflaborbytopic,buttheysoonconcludedthattheirinfluencedependedonmaintainingunity,andtheyagreedthatthefirstprioritywascuttingexpendituresandprivatizingwherepossible(Ota2006:255) AnumberofseniorLDPpoliticianssharedthisview.Some,ledbyNakagawaHidenao,opposedvirtuallyalltaxincreases;others,suchasPrimeMinisterAbe,FinanceMinistersOmiKōjiandNukagaFukushirōandMETIMinisterAmariAkira,werewillingtoconsiderasmallincreaseintheconsumptiontaxifitcouldbeusedtoreducecorporateorincometaxes.ThemostconsistentandvociferousproponentofcuttingexpendituresratherthanincreasingtaxeswasNakagawa.AgraduateofKeioUniversity’sLawFaculty,Nakagawaworkedasareporterfor the leadingbusinessdailyNihon Keizai Shinbunbefore inheritingaDiet seat fromhisfather-in-law, a party politician and fierce critic of the bureaucracy (Nakagawa 2008: 30).Nakagawaenteredthecabinetinmodestpostsin1996and2000.Hewasnotafactionleaderandprovedelectorallyvulnerable,failingontwooccasionstowinelectiontotheDiet,butfrom2002-2005hespentarecord-breakingtermastheLDP’spointmanforDietnegotiations.Hisbooks“RisingTide”and“TheCollapseoftheBureaucraticState”(Nakagawa2006,2008)calledon Japan to surf on a rising tide of growthby cutting taxes, and assailed Japan’s “stealthhybrid”elite,particularlygraduatesoftheLawFacultyattheUniversityofTokyo,whowerefarmorelikelytobefiscalhawksthantaxcutters(orbigspenders).Nakagawaarguedthatitwasunfairandpoliticallyunviabletoaskordinarycitizensfortaxincreasesbeforeeliminatingwastefulexpenditures.

Fiscal Hawks

In contrast, the Ministry of Finance, its advisory bodies, many economists, and LDPleaders such as Finance Ministers Tanigaki Sadakazu and Yosano Kaoru and financialservicesministerYanagisawaHakuoclaimedthat“healthy”or“prudent”fiscalpolicyrequiredanincreaseintheconsumptiontax.Likethebureaucrats,manyofthefiscalhawksintheLDPhailed fromtheLawFacultyof theUniversityofTokyo. Manyweresonsofbureaucrats(Yosano)orpoliticians(Tanigaki)orlinkedtotheMinistryofFinance.Noneheadedafaction,andmosthadrelativelyweakelectoraland fund-raisingrecords,yet theywereamongtheLDP’smostinfluentialmembers.YosanocameinsecondtoAsointheLDP’spresidentialrace,andTanigakiranseveraltimesbeforefinallyassumingpresidencyofthepartyafterAso’sdisastrouslossinthe2009HouseofRepresentativeselection. Thefiscal hawksgavefirst priority to restoringfiscal discipline, initially by achieving“primarybalance” (balancing thebudget other thanbond repayments) as soon as possible.Theyacceptedtheeconomicandpoliticalcaseforcuttingunnecessaryexpendituressuchas


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publicworksbeforeincreasingtaxes,buttheybelievedthatitwaspoliticallyunrealisticandnormativelyundesirabletocutsocialspending(Yosano2008:150-152).Ratherthantakingahypothesizedmaximumtaxburdenasastartingpoint,theyarguedforcalculatingtheamountnecessarytofundsocialwelfareexpendituresatclosetocurrentlevels,andthenworkingoutacombinationofexpenditurecutsandtaxincreasessufficienttopayforthem.Asapracticalmatter,theysettledontheconsumptiontaxforitsstabilityandprodigiouscapacitytogeneraterevenue.Whiletheconsumptiontaxwasregressiveinincidence,thespendingitsupportedwas generally progressive, and exemption of basic items such as food could soften theregressivity,albeitatthecostofincreasedcomplexityandlowerrevenue(Kato2003).Fiscalhawksarguedformakingrealisticassumptionsaboutgrowthandinterestrates,andassailedthedeliberatecourtingofinflationtomeltoffpublicdebtasa“demonictechnique”悪魔的手法(YosanoinShimizu2009:93).

Big spenders

Despiteheateddisagreementsovertaxpolicy,taxcuttersandfiscalhawksagreedontheimportance of cutting expenditures. Naturally, many politicians, bureaucrats, and interestgroupsresistedattemptstocutfavoredprograms.Afterthefailureofthehugebudgetstimuluspackagesofthelate1990s,fewLDPleadersadvocatedexpansionaryfinanceasamatterofprinciple, butbackbenchpressurewasunrelenting, andwhenelections loomed, even someleaderscalledforexpandingexpenditures.Forexample,in2008,DietcountermeasureschiefKogaMakoto,PARCchairHoriKōsuke,andpresidentialcandidateAsōTarōallcalled forresistingexpenditurecuts(Nihon Keizai ShinbunAugust6,2008).Thesevoicesrarelyappearedin the CEFP, however, and they typically defended specific items rather than making aprincipled case for larger expenditures (Asahi Shinbun, November 15, 2007). Instead, theycriticized theunelectedprivatemembers of theCEFP (includingTakenakabeforehewaselected to theHouse of Councillors in 2004), and complained about inconvenient timing ofexpenditurecuts(Asahi ShinbunOctober16,2007;YamanakaSadanoriinOta2006:191). Overall,though,thestrikingfeatureofthebigspenderswastheirweaknessandlackofconfidence.Theyrarelyheldkeypolicymakingdecisionsintherulingpartyorgovernment,andtheydidnotattempttoarticulateaseriousideologyormountasustainedmediacampaign.Theywieldedonlymarginalinfluence,andcouldnotstopnetbudgetcuts.

Fiscal hawks gradually gain the advantage

FromthelatterpartoftheKoizumiadministration,thefiscalhawksslowlyandalmostimperceptiblypulledahead.ThoughtheAbeadministrationwasideologicallyconservativeandfavoredtaxcuts,CEFPMinisterOtadeniedbeinganadvocateofthe“risingtide,”andPrime


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MinisterAbetoldtheDiet,“AsfarasIcanrecall,Ihaveneverusedtheexpression.”(Shimizu2009:196,198).AbeandOtasoughttoincreaseproductivitythroughderegulationandevenconsumerprotection,andfocusedontheimplicationsoffiscalpolicyforproductivity,ratherthanavoidingalltaxcutsperse. Fukuda,whose fatherhadbeenheadof thebudgetbureauat theMinistryofFinancebeforebecomingprimeminister, basically favoredprudentfinance andprotection of socialsecurity.UnlikeKoizumi,hewasnotunalterablycommittedtoworkingthroughtheCEFPwithitseconomistsandbusinessexecutives.Forexample,in2007heestablishedajointLDP-Komeitocommitteeonjointconsiderationoftaxesandsocialwelfare.UnliketheCEFP,thecommittee included the minister responsible for social welfare and labor (Asahi Shinbun October23,2007andSeptember27,2007).Politically,Fukudawasnotinpositiontoactasanactive fiscal hawk.Hobbled by aweak party base, a cabinet coalition, and the opposition-dominatedHouseofCouncillors,hetriedtobalancefactionsandpolicygroups,andreliedonmultipleadvisorycouncils. AsowasevenlesscommittedtoKoizumi’sstructuralreformsandpubliclyquestionedthepriorityplacedonbalancedbudgets.UnlikeAbeandFukuda,hedidnotreceiveKoizumi’ssupport in theLDPpresident’s race. But likeFukuda, he engaged in balancing in a futileattempttoretainsupportanddealwiththeopposition.HeformedanunlikelyalliancewithYosano,andpromisedtogettoworkonthedeficit—later.Finally,afterthefallofAso,theLDPunder Tanigaki incorporated into its electoral platform for the 2010 House of Councillorselectionapledgetohiketheconsumptiontaxto10percent.ToTanigaki’sannoyance,theDPJimmediatelycopiedtheproposal.Increasingtheconsumptiontaxhadbecomethemainstreamconsensusamongpolicymakersandtheleadingparties—butthevotersrejectedtaxincreases,handingtheDPJadefeat,andfavoringsmalleroppositionpartiesasmuchastheLDP. EspeciallystrikingfromthelastyearoftheKoizumi’sadministrationthroughhisthreeLDPsuccessorswastherecurrentrelianceontheleaderofthefiscalhawks,YosanoKaoru.Thegrandsonoffamouspoets,sonofadiplomat,andgraduateoftheTokyoUniversityLawFaculty,Yosanoworkedbrieflyinthesemi-privatesector(JapanAtomicPowerGeneration,ajoint venture of the regional electric power monopolies) before working as a secretary toformerPrimeMinisterNakasoneYashuhiroandasDeputyChiefCabinetSecretaryunderLDPheavyweightKajiyamaSeiroku.Yosanoenteredthecabinetaseducationministerin1994,andthenservedprimeministerObuchiKeizoasaMITIministerin1998.Despitehiselitebackground, powerful patrons and widespread contacts in the bureaucracy and businesscommunity,Yosanofailedtobuildapowerfulelectoralbaseandneverheadedafaction.ThreetimeshefailedtowinelectiontotheDiet,includingduringthefirsthalfofKoizumi’sterm;heonlyscrapedhiswaybackintotheDietin2003byvirtueofaspotontheLDP’sproportionalrepresentationticket. Yosano was a moderate, pragmatic conservative. He supported Koizumi’s structuralreformsasrightfortheirtime,butdeniedthattheyrepresentedeternalverity.Sharplycritical


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of “market fundamentalism,” he advocated “market realism,” and “humanist democracy”(Yosano2008:70).Hesaidthatthegovernmenthadtoseekfairnessbutnotequalityperse.Aboveall, ithadtobepragmatic (Yosano2008:76-80).Yosanowasbasicallypositiveaboutbureaucrats.HesaidhehadlearnedfromKajiyamahowtousebureaucratswithoutbeingusedbythem,andclaimedthatheseldomacceptedpolicybriefingsfrombureaucrats(Yosano2008:32-38,26).Hesawbureaucratsasmotivatedprimarilybyasenseofhonorandmission(Yosano2008:139)andrarelymentionedamakudariorbureaucraticscandals.Hepresentedadetailedrefutationoftheargumentsofthe“risingtide”faction,andforcefullyadvocatedasimplepolicyprescription:raisetheconsumptiontaxtorestorefiscalbalance(Yosano2008:149-171). DuringtheadministrationsofKoizumiandhissuccessors,Yosanoservedinaremarkablearrayofposts.In2004,KoizuminamedhimheadoftheLDP’sPolicyAffairsResearchCouncil,wherehewasresponsibleforguidingpostalprivatization—Koizumi’ssignaturepolicyinitiative,draftedbytheTakenakateam—throughtheparty.In2005,afterKoizumi’striumphinthe“postalelection,”Yosanoservedasministerofstateforeconomicandfiscalpolicy.AsCEFPminister,hetookresponsibilityforcompilingKoizumi’sfinal“bigboned”(honebuto)report.TothedisgustofTakenakaandOta,YosanoarguedforcoordinatingwiththeLDPratherthantryingtoovercomeitsopposition.KoizumibalancedYosanoand“risingtide”leadersNakagawa,endinginanambiguousvictoryforYosanointhefinalreport,whichcalledforbothhighertaxesandahighernominalgrowthrate(Shimizu2009:93-97).Forbigspenders,however,thereportwasclearlyamajordefeat.Theplanaimedtobringtheprimarybalanceofthecombinedcentralandlocalgovernmentbudgetsbackintotheblackby2011.Theintegratedreformofexpendituresandrevenuecalledforashiftof16.5trillionyenoverthefollowingfiveyears,includingatleast11.4trillionyen—over70percentofthetotal—inexpenditurecuts(CEFP2006:15-19,47-48). InOctober2006Yosanowastemporarilysidelinedbya13-houroperationforcancerofthepharynx(Yosano2008:113-115).Evenafterhisrecovery,hedidnotatfirstreceiveapositionundertheyoung,growth-orientedAbe,whofocusedoninnovationandopennessasawaytostimulategrowthandobviatetheneedfortaxincreases.Butinthelastmonthofhisterm,aflailingAbebroughtinYosanoasSecretaryGeneralinafutilebidtorestorehispopularityandauthority. Yosano also initially failed towin a position under Fukuda, but he still exertedindirectinfluencethroughtheinterimreportoftheResearchGrouponFiscalReform,ofwhichhewaschair.Thereport(LDP2007)calledforcontinuedreductionsinexpenditures,anda“streamlinedandefficient”(ratherthansmall)governmentwithamid-sizedwelfare/mid-sizedtaxburden,andahikeintheconsumptiontaxto10percentbythemid-2010stopayforit.WhenFukuda’ssupporterratingssagged,he,likeAbebeforehim,calledonYosano,naminghimspecialministerfortheCEFPandforregulatoryreform,justamonthbeforetheendoftheFukudacabinet. Aso,onceanavowedskepticofprudentfinance,keptYosanoon.WhenNakagawaShōichi,minister of both finance and financial supervision, resigned after showing up drunk at an


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internationalmeetinginRomeinearly2009,AsoaddedthosetwopoststoYosano,leavinghimincompletecontrolofeconomicpolicymaking.Bythattime,ironically,theglobalfinancialcrisiswasexertingstaggeringcontractionarypressureontheJapaneseeconomy,andtheadvocateof balanced budgets resigned himself to supervising creation of a large stimulus package:"WithintheLDP,Ihavebeencategorizedaspartofthe‘fiscaldisciplinefaction’財政規律派,butforthetimebeingIhavechangedmysect.Fiscaldisciplineisimportant,butacrisisrequiresanappropriateresponse.Wewilladoptallpolicymeasuresnecessarytoachievetheeconomicrecoveryagreedtobythenationsoftheworld." (Shimizu2009:45).Despitethispragmatictacticalretreat,thedependenceofsuccessiveprimeministersontheseniorpolicyspecialist,andthepowerlessnessofbackbencherstostoptheleaderofthefiscalhawks,wasclear.

Bureaucratic staff

IfinfluentialpolicyspecialistswithintheLDPplayedaroleinrestrainingexpendituresfarbeyond that captured by the dramaturgy of “prime minister versus backbench forces ofresistance,” bureaucratic staffers, particularly officials seconded to the cabinet from MOF,METIandtheMIC,werealsocrucialplayers incoordinatingand implementingbudgetaryreforms.Themost stridentadvocatesof structural reforms,particularly leadersof the taxavoidancegroupsuchasTakenakaandAbe,oftenharshlycriticizedbureaucrats,not leastthoseservinginthecabinet.RisingtideleaderNakagawaquotedPrimeMinisterMurayama,whomNakagawaservedasanassistantin1994,aslamentingthatinacabinetofficecontaining300bureaucrats,theprimeministerandthreeotherpoliticiansweremere“birdsinacage”(Nakagawa2008:39).Koizumiaccusedthebureaucratsofattendingonlytotheironlyinterests.EarlyinhisadministrationheparticularlylamentedtheMinistryofFinance’slackofenthusiasmforstructuralreformssuchasprivatizationofhighwaysandpostalservices, reformof theFiscalInvestmentandLoanProgram,government-relatedfinancialorganizations,andspecial-purposecorporations:“TheFinanceMinistrysaidnothingaboutalltheseprogramsthatIamnowreforming” (CEFP2002: 25).Takenaka (2008: 40, 124-126) complained thatbureaucratsstuck toprecedentbecause theywereunwilling toadmitpastpolicy failures.Otaand theCEFPprivatememberOkudaHiroshi (ChairmanofToyota)castigated thebureaucracyascautious,slow,compromising,chronicallyinclinedtowardadjustinginterestsratherthantakingboldinitiatives,andextremelyreluctanttoacceptspecifictimetablesandnumericaltargets(Ota2006:83-94). Koizumiandhisadvisorsdevelopedanumberofcountermeasurestoovercomebureaucraticaversiontostructuralreform.Koizumi frequently insistedthatthekeywascontrollingthedetailsratherthandelegatingthemtothebureaucracy(大事なのは各論)(Ota2006:88).Takenaka(2008:88,162)echoedtheimportanceoffollowinguponthedetails.Ota(2006:17-18)saidthatitwasimportanttorelyontheprivatemembersandtheprimeminister’soffice(官邸)rather


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thanthecabinet,butsheadmittedthatinpracticeitwasoftendifficulttoascertainwhowasissuingorders.SometimestheKoizumi-Takenakateamtriedtoignoreorperformanendrunaround the bureaucrats, especially when it came to postal reform, though Takenaka washimself a formerbureaucrat, andmadegreat use of the renegadeMOFofficialTakahashiYōichi,abittercriticofthebureaucracy(Shiota2005). Despitethisingrainedsuspicionandhostility,eventhosemostcriticalofthebureaucracyagreedthatsecondedbureaucratswerecrucialtothepolicymakingprocess.Incoolermoments,Ota(2006:13)acknowledgedthatArticle4ofMOF’sestablishmentlawassignsresponsibilityforcompilingthebudgettotheFinanceMinistryanddoesnotevenmentiontheCEFP.Shealso noted (Ota 2006: 92) that while relations between CEFP and MOF were sometimesconflictual,theywerealsosometimescooperative.TakahashiYōichiandhiscoauthor(TakahashiandSuda2010:47-48)advisedthatcontrollingtheAssistantChiefCabinetSecretaries,ofwhichanofficialsecondedfromtheMOFismostimportant,isthe“heart”(literally“liver”)oressenceof political leadership.Bureaucrat sympathizerYosano (2008: 136-142)went even further—makegooduseofbureaucrats,andyouwon’tevenhavetoworkhard! TheMinistryofFinanceandMETIoccupydominantpositionsamongsecondedstaffinthecabinet.FourofthefivepositionsasExecutiveSecretarytothePrimeMinister(秘書官)havebeenreservedforkeyagencies:MOF,METI,theForeignMinistry,andthepoliceAgency,ofwhichMOFandMETIareby far themost influential, especially onbudgetsandothereconomicissues(thefifthpositionisreservedforapoliticalsecretary).AllbutoneofKoizumi’sExecutiveSecretariesservedthroughhisfulltermoffiveyearsandfivemonths(seethelistatIijima2006:334).IfthebroaddirectionforthebudgetissuedfromtheprimeministerandCEFP,the“ceiling”frameworktorestrictbudgetaryrequestsandtheevaluationofindividualitemsstillcamefromtheMOF(Ota2006:110). Special project teams at a slightly lower level of seniority came from four other bigministries,buttheywereexpectedtoshowloyaltytothecabinet,andnotsimplyworkonissuesofinteresttothehomeministry(Iijima2006:28-32).Manybureaucratsworkedinthecabinetforextendedperiods,sometimescoveringtwoormorecabinets,andextendingasfarbackasHashimotointhemid-1990s.ThevastmajorityweregraduatesoftheLawFacultyattheUniversityofTokyo. Secondedbureaucratsremainimportantpartlybecausefourofthealternativesadvancedsincethe1990shavenotprovedparticularlysuccessful,aseventheiradvocatesacknowledge.Increasing the number of juniorministers (Takenaka 2002) has notmademuch differencebecausejuniorministerisstillprimarilyalearningposition,anddistributionofposts(unlikethecasewithministers)isstillprimarilydeterminedbyfactions(seee.g.Asahi ShinbunSeptember28,2006fortheexampleoftheAbecabinet).Someprimeministers,notablyAbe,attemptedtorelyonspecialadvisorstotheprimeminister(内閣総理大臣補佐官),butthespecialadvisorslackindependent legal authority and often conflictwithministers (Shimizu 2009: 134-139;Asahi Shinbun September 29, 2006). Fixed-term contract staff from universities and the private


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sector have played some role—Ota was initially hired on a fixed-term contract—but theimportance of seniority and the difficult of carrying out mid-career hires in the Japanesepersonnelsystemhasprovedamajorobstacle,andindividualsparachutedinfromtheprivatesectoroftenhavefoundthemselvesisolatedandcutofffromtheinformationcontrolledbythebureaucrats(Wedge,December2007:10-12).Afteraninitialburstofinterest,thenumberofcontractstaffatCEFPdeclined(Ota:260-262).NorhasthestaffoftheDietanditslegislativecommitteesexpandedmuch,despiterepeatedproposalsfromNakagawaHidenaoandotherpoliticiansandscholars(Nakajima2007:235-239;Nakagawa2008:35-36). Moreusefulhavebeenthe“MinistersofStateforSpecialMissions”introducedaspartofthereorganizationofthecentralministriesandcabinetin2001.Specialministerspossesslegalauthority,belongtothecabinet,andareresponsibletotheDiet,yettheycanrespondflexiblytoaddressnewpolicyissues.PrimeMinisterKoizumi,forexample,wasabletonameTakenakaHeizōspecialministerforpostalprivatization.Ofcourse,confusionoverrolesandthepotentialforconflictwiththeministersofthelineagenciesstillexists(Ota2006:16),andspecialministerslackbackupfromministerialstaff—forcingthemtorelyprimarilyonofficialssecondedfromthevariousministries. TheCEFPplayedthecrucialroleinsettingthedirectionofbudgetarypolicy,anditreliedheavilyonbureaucraticstaff.Mostof its200orsomembershailedfromtheoldEconomicPlanningAgency (EPA),asupportrather than lineministry thathaddevelopedsignificantexpertiseinmacro-economicsbutwieldedlittlepower(andindeedwaslargelycolonizedbytheFinance Ministry). Of seven Directors-General for Policy (政策統括官) in the cabinet, threeworkedattheCEFP.AmongthecrucialsecondedbureaucratsatCEFPwereKishiHiroyukiofMETIandTakahashiYōichiofMOF(Shimizu2005:272-275;Shiota2005).Kishi,akōhaiofTakenakaattheeconomicsdepartmentatHitotsubashiUniversityandholderofanMBAfromColumbia,workedinthecabinetforTakenakaformorethanfouryears.Takahashi,agraduateofthemathematicsandeconomicsdepartmentsatTokyoUniversity,wasavisitingscholaratPrincetonunderBenBernanke,who laterheaded theFederalReserve.TakahashiassistedTakenaka from 2001, officially entered the cabinet in 2003, and stayed through the Abeadministration. Some seconded bureaucratswere renegadeswho cut tieswith their homeministries and after leaving the cabinet became academics, managers, or private businessexecutives.In2008,bothKishiandTakahashijoinedEdaKenji,aMETIbureaucratwhohadhelpeddesignmanyofPrimeMinisterHashimoto’sreformsbeforecomingapolitician,andotherprominentfiguresincreating“ThegroupofformerbureaucratschangingbureaucraticstateJapan”[官僚国家日本を変える元官僚の会]（脱藩官僚の会)]. TheCEFPprivatemembersdidnottrustbureaucratsnotto leak informationbacktotheirhomeministries,soin2002theCEFPcreateda“specialorders”teamunderProfessorHonmatosetthecouncil’sagenda.Initially,ex-EPAofficialsandcontractemployeesfromtheprivatesectorstaffedtheteam,butitlateraddedsecondedmembersfromvariousministries.EvenTakenaka admitted that independent expertswere rare in Japan, and that his anti-


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bureaucratic “Team Takenaka” and “guerrilla team” for postal reform relied heavily on“visionarybureaucrats”(Takenaka2008:139).Moregenerally,onceproposalsfromtheprivatesectormembersmovedtospecificitemsforincorporationintotheHonebutoplans,theCEFPhadtomobilizethefullpanoplyofbureaucraticsupport(Ota2006:150-152;cf.alsoTakenaka2008: 225-227).AsPrimeMinisterKoizumi noted, “Unlesswe thoroughly revise thewholestructure of wasteful spending, it will not be possible to regenerate the economy…Ifdisagreementsonspecificissues[suchasthesizeorcompositionofexpenditurecuts]arise,wewillrequesttheassistanceoftheMinistryofFinance.IwanttheFinanceMinistrytopleasethinkofitselfasthesecretariatfortheCEFP.”(CEFP2001:16) OutsidetheCEFP,theKoizumicabinet’srelianceonbureaucraticstafftokeepcontrolover expenditureswas evenmore obvious. Iijima Isao (2006: 60),who served asKoizumi’spoliticalsecretaryformorethan30years,wasespeciallyemphatic:

TheabilitytoincorporatesoradicallythespecificfeaturesoftheKoizumireformsintheHonebutoprogramdependeduponthepoweroftheteamofCabinetSecretariatCounsellorsunderAssistantChiefCabinetSecretaryTakeshima,whostoodat the forefrontof thebattletosupporttheprivatesectorfigureMinisterTakenaka,andDirector-GeneralSaka,whocurbedtheresistanceoftheministriesandagencies.ThisisanexampleofwhatImeanby'makingfulluseofbureaucrats'.

TakeshimaKazuhiko,acareerMOFofficial,servedasIijima’s“Mr.Outside,”whileSakaAtsuo,another elite MOF official, served as “Mr. Inside” (Shimizu 2009: 148). Tango Yasutake, abudgetspecialistwholater(2009)ascendedtoMOF’stopcareerpostofadministrativeviceminister,alsoplayedakeyroleduringtheKoizumiadministration(Iijima2006:28-32). OfthelastLDPprimeministers,Abewasthemostskepticalofbureaucrats,especiallyMOFbureaucrats,anddidthemosttoseparatethemfromtheirhomeministries.Hereliedonopenapplicationsfromindividualofficials(公募)ofwhichhereceivedmorethan80,ratherthannominationsbytheministries(Asahi Shinbun,September27,2006).Hetoldwould-beapplicantstoexpecttoburntheirbridgestotheirhomeministries;successfulcandidateswerenottocontacttheirhomeministries,andwereassignedtoproblemsunrelatedtotheexpertisetheyhaddevelopedattheirhomeministries(Shimizu2009:150).IfAbetriedtoreducethepoweroftheMinistryofFinance, intheendhereliedheavilybothonthecoordinatingpowersofsecondedMOFofficialSakaAtsuo,andonavarietyofMETI-relatedbureaucratsandpoliticians,includingMETI alumni in theLDP (Shimizu 2009: 148, 185, 136). For his “AsiaGateway”project(www.kantei.jo.jp/jp/singi/asia/),AbereliedonExecutiveSecretaryNemotoTakumi,anex-ConstructionMinistrymemberof the lowerhouse,withadministrativebacking fromMETIandMOF,whileattheCEFPOtaleanedonMETI’sNoharaSatoshi. Like Abe, Prime Minister Fukuda relied heavily on MOF’s Saka, and indeed one ofFukuda’sproblemswashisperceivedbiastowardbureaucrats.HisattempttobalancemembersfromMOF,theBankofJapan,andacademiceconomicsledhimtokeepnominatingex-MOFofficialstotheBOJ,eventhoughtheDPJopposedappointmentofex-bureaucratsandwasina


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position todefeathisnominations (Shimizu2009:334-339).Constrainedby thealliancewithKomeitoandthedesiretocreateamodusvivendiwiththeopposition-controlledupperhouse,FukudaandtheCEFPunderhisdirectiondelegatedmuchoftheauthoritytosetbudgetaryprioritiestoMOF,leadingtocomplaintsof“arevivalinMOFpower”(Asahi ShinbunJuly29,2008).Tocounterfearsthathewaslosingmomentuminthefightagainstwastefulexpenditures,theLDPunderFukudaestablishedaprojectteamtoreduceadministrativewaste—withhelpfromJapanInitiative (構想日本),aprivateorganizationfoundedbyformerMinistryofJapanofficialKatōHideki(Asahi ShinbunJune27,2008).

Conclusion

Japan’sfiscalsituationisindeedgrave,butcontrarytoconventionalwisdom,itsprimaryproblemisnotpoliticalfailurebutdemographicandeconomicpressures.Anagingsocietywitha shrinking work force has combined with two financial crises—domestic after 1990 andespecially after the financial collapses of 1997, and international in 2008-2009—to constrictpolitical choices. Japan’s gaping budget deficit and huge accumulated debt have resultedprimarily from a catastrophic decline in tax revenue, not from ballooning budgetaryexpenditures.Despitethetremendouspressures,politicalleadersoverthelastdecadehaveexercised considerable restraint over aggregate spending, and have reoriented budgetaryexpendituresfromdistributiveoutlayssuchaspublicworkstowardsocialwelfareandotherformsofprogrammaticspending. Totheextentthatthisoutcomehasevenbeenrecognized,theconventionalexplanationhighlights institutionalreformssuchasrevisionoftheelectoralsystem,campaignfinancingreform,andthestrengtheningofthecabinetsystem,leadingtostrongerpoliticalleadership,assymbolizedbyPrimeMinisterKoizumi.Clearly, institutionalreformsarepartof thestory.After2005,however,continuedconstrictionofexpenditurescontinueddespiteweak(orinthecaseofKoizumiafterthe2005election,preoccupied)primeministers.Thissuggeststhatwemust lookbeyondthe “reformistprimeministerversusprofligatebackbenchers”structure.InfluentialseniorLDPleaderswithreputationsaspolicyexpertssuchasrisingtideadvocateNakagawaHidenaoandfiscalhawkYosanoKaorucombinedwithsectionsofthebureaucracy,particularly officials seconded to the cabinet from the Ministry of Finance and METI, torestrainexpenditures.Insomeways,thisharksbacktoapatternidentifiedbyMakihara(2003)for the 1950s and early 1960s, in which officials from MOF and parts of other ministriesorientedtowardthecabinetcooperatedwithleadingLDPofficials(seealsoNakajima2007:127-129onlonger-termtrendstowardthedevelopmentof“cabinetbureaucrats.”). To be sure, pressures to boost spending, especially particularistic spending, welledwhenever theeconomyweakenedoranelection loomed, and seniorpoliticiansperiodicallygavevoicetothosedemands.NordidinfluentialLDPleadersalwaysseeeyetoeyewiththe


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MinistryofFinance;evenKoizumiandthefiscalhawksoccasionallyclashedwithMOFandMETI bureaucrats. Yet the politicians with the reputations for serious and sustainedcommitmenttopolicyweregenerallyabletorelyonofficialssecondedfromMOFandMETItoimplementrestraintonexpenditures,andfrom2001untiltheLDPfellfrompowerin2009,fiscalstringencyandrestrictionofparticularisticspendingconsistentlywon. Ontherevenueside,weakerprimeministerswereactuallymorewillingthanKoizumitoconsidertaxincreases.Afteralongstruggle,thefiscalhawksdefeatedthetaxcutters,andaneliteconsensusemergedthattheconsumptiontaxshouldincreasetoatleast10percent.Themootedtaxhikewasblockednotbyweakleadershiporvetoplayersinthepoliticalsystem,butbytheelectorate,whichpunishedtheDPJ(andtoalesserextenttheLDP)forchampioningtheincreaseintheconsumptiontax. Rejectionoftheconsumptiontaxreflectedthepublic’sconflictedattitudetowardwelfarespending,andevenmoreitsskepticismabouttheeffectivenessandfairnessofgovernmentspending.Numeroussurveysoverthelastdecadehaveshownthatthemajorityofrespondentspreferhighbenefitstolowcosts(Takegawa2010).AnAsahi Shinbunpollfrom2008foundthepublicmoreevenlysplitonwhethertosupporta“hightax,highbenefit”model,ora“lowtax,low benefit” approach, but it showed that an overwhelming majority believed that thegovernment,ratherthanindividuals,boreprimaryresponsibilityforprovidinghealthcareandpensions (Asahi Shinbun July 26, 2008). Cabinet (2010) surveys also demonstrated theconsistentlyhighprioritythepublicplacedonpublicpensionsandhealthcare.Surprisingly,poorpeopleandwomenwerelesssupportiveofthehightax-highbenefitmodelthanweremenandthebetteroff,reflectingboththeburdenoftheweakeconomy,andthepoliticalrealitythatfordecadesthepoliticalsystemchanneledrevenuestofarmersandotherclientsoftheLDPratherthantothepopulationasawhole.Manypoorervotersappeartofearthattheywillpaythehigherconsumptiontaxes,butreceivefewbenefitsinreturn(Takegawa2010),afearthatiswell-supportedby theoverwhelmingevidenceof theparticularisticbiasof the JapanesewelfaresystemunderSNTV(Estevez-Abe2008). Inmanyways,developmentsinJapanresemblethoseintheUK,whereastrongerprimeministersurroundedby“primeministercliques”appeared:“Whilenotall-powerful,theprimeministercanbemorepowerfulasanindividualthanthecabinetcanbeasacollectivebody.TonyBlairmostcertainlyhasbeen"(Heffernan2005:40).Yettheprimeministerisnotalwayseffective,particularly ineconomicpolicy,asTonyBlairalsoproved,particularlyafter2003.Powerwasactuallywieldedbya“coreexecutive”spreadacrossanumberofagencies(RhodesandDunleavy1995),mostnotablytheTreasuryunderGordonBrown."TheBrown-Blairrivalryis not just about personalities and court politics. It is aboutwho controls theheart of themachineandtheTreasurywon” (FawcettandRhodes2007:102). It isnoteworthythatthechangesinBritainoccurreddespiteastableelectoralsystem.Rather,theincreasingpoweroftheprimeministerandtreasurerreflectedchangesinthedomesticpoliticalenvironment(thegrowthoftelevisionnewsandthedeclineinunionsandthesalienceofsocialclass)aswellas


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Britain’s international situation (the emergence of the European Union and the increasingfrequencyofinternationalsummits).Similardevelopmentshavemarkedthelargemajorityofparliamentarysystems(PoguntkeandWebb2005). Japan--liketheUKafterBlair,Brown,andthefinancialcrisis—faceshugefiscaldeficits.TheshrinkingworkforceandthepressureofdeflationmeanthatJapanisconstantlyteeteringontheedgeofrecession,leadingtopopulardissatisfactionandevenmorereluctancetoraisetaxesthanintheUKorUS.UnliketheUKoreventheUS,however,Japanasanetcapitalexporterfaceslittleexternalpressuretoreform—atleastyet.UncertaintyaboutwhenJapan’sgravefiscalproblemscouldbecomeanactualcrisisalso inhibitsaction.Moreover, the latedevelopmentoftheconsumptiontaxmakesitmoredifficulttoreducethedeficitbyincreasingtaxesthanintheUKandmostEuropeancountries(Kato2003).Japan’sbicameralsystem,withits diverging electoral systems and lack of double dissolution, also raises the prospect ofgreater gridlock under divided government, as has occurred since 2007. Recent researchsuggeststhatdemocraticsystemscanprovesurprisinglyresponsive(seee.g.Kitscheltetal.2010onLatinAmericaandSorokaandWlezien2009onAnglo-Americancountries).JapanesevoterscanonlyhopethatthosefindingsproveapplicabletoJapanaswell. Ifso, influentialseniorpoliticiansandelitebureaucratsfromMOFandMETIarelikelytoplayacrucialroleinsupplementingtheinitiativesofprimeministers.

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