Abenomics Increased Donation

Ministry of Internal Affairs and Communications released the amount of political donation by companies, labor unions or industrial groups in 2013. Big names in Japanese business scene occupied top 10 of donation to an organization for Liberal Democratic Party, revealing close relations between economic policy by Prime Minister, Shinzo Abe, and major industries. This is an evidence that Abenomics has not been for small and middle businesses, but reward for top business leaders with political contribution.

National Political Association, an organization managing donation to LDP, received ¥1.95 billion in 2013, which marked 43% increase from the previous year. Although the amount was lower than in pre-Lehman Shock era, which had been around ¥3 billion, it showed significant increase from the time of the opposite status in 2010 to 2012.

Top corporation in donation amount was Toyota Automobile Corporation with ¥64 million. Canon, Sumitomo Chemical, Nippon Steel & Sumitomo Metal, followed Toyota. Heavy industries including carmakers or steel producers positively donated to LDP. Mitsubishi Heavy Industries increased the donation four times more than the previous year. Among security companies, which enjoyed large profit from vigorous activities in the market, Nomura Holdings increased its donation from ¥5 million in 2012 to ¥28 million in 2013.

Those companies have been leading Japanese economy for a long time. A big company club, or Keidanren, restarted recommendation for donation to LDP to encourage further favor for big companies from the party, which would in other words be corporate tax cut. If Abe decides it, instead permanent suspension of consumption tax hike, his economic policy will be proved as nothing but a support to big companies with sacrifice of smaller businesses and ordinary families.

Moral discussion over banning political donation from corporations or organizations is shrinking. With endless revelation of scandals, regulation on political money has became stricter than ever. Politics was recognized as being handled without power of money. With that notion, politics was thought to be better relying on tax money than on corporation or organization. However, Abe administration has not shown serious perspectives for getting rid of people’s apathy on politics.

It is obvious for everyone that this tendency will lead to significant corruption. Dependent on money from labor unions, Democratic Party of Japan also became negative on the regulation of donations. Next administration of Abe must be more active in collecting money from corporations or organizations. Democracy in Japan will represent only a part of its society.

A Year of Air Intimidation

Ignoring warnings from Japan and its allies including the United States, China keeps on asserting its right in newly-set air defense identification zone in East China Sea. Chinese Force reiterated intimidation to the aircrafts of Japanese Air Self-defense Force by reaching them too close. The Chinese force looks like to be willing to make some unexpected events happen in the growingly unstable region, which no others want.

November 23rd was the first anniversary for China, since it set ADIZ, overlapping Japan’s. That day last year, China unilaterally announced that. While American Air Force penetrated the zone to test China’s intention, which brought no trouble, non-military commercial jets were careful not to get into the area to avoid being targeted by the Chinese Force.

The Chinese has been accumulating actions, wanting to be recognized as if the zone was theirs. In January, Chinese Air Force announced that they made a sound warning to a foreign military aircraft in the zone. When Japanese Air Self-defense Force recognized unusual reaching of a Chinese fighter jet to Japanese military aircraft in May, the Chinese force argued that was a disturbance of Japanese aircraft to the joint military exercise by China and Russia. In a extremely dangerous case when a Chinese fighter jet reached Japanese aircraft as close as a hundred feet in June, China insisted that they kept five hundred feet. It was not the matter of distance, anyway.

Improvement of command of the air in the East China Sea is one of the critical purposes for Chinese military. Xi Jinping administration has been demonstrating its ability of its Air Force by exhibiting brand-new stealth fighter jet, J-31, or airborne early warning and control system, KJ-2000. According to a report of Yomiuri Shimbun, the Chinese are improving their warning ability with integrated system of balloon and maritime reconnaissance satellites.

Yomiuri also quoted Xi’s comment in military conference. On the operation in the ADIZ, Xi was satisfied with results, saying “It’s been quite a good effect.” “East China Sea is the first attempt. Let us consider the South China Sea next,” he added. Although they do not have enough capability to control the broad area in the South China Sea, their motivation is to build up a stronghold in Spratly Islands by landfill of archipelago around.

China looks like a crazy driver on highway. Reaching close to others, loudly honking, frequently changing lanes and not hesitating causing car crush are what the Chinese Air Force has been doing in the East China Sea. Nobody would drive such kind of road, and making people feeling that is their purpose. Sadly enough, China is becoming a rogue nation in terms of air operation.

Pressure for Fairness

Reaching the general election of the House of Representatives, Liberal Democratic Party made an unusual attempt to put a pressure on TV stations. Chief Deputy Secretary General, Kouichi Hagiuda, summoned senior journalists in his room and distributed a document that required each TV station fairness in reporting the election. Although the party dismissed its intention to oppress news media, the government had power to issue license for broadcasting. It was an obvious disturbance of freedom of speech. Where has democracy in Japan gone?

The document was delivered on 20^th of November. It demanded election reports to be impartial, neutral and fair. “The election of the House of Representatives is short term campaign and media reports may greatly affect the outcome,” it described. It specifically required TV discussion to be distributing speaking time with fairness, preserving impartiality in selecting guest speakers, topics and interview footage of ordinary citizens.

Behind the appeal of LDP, there was a frustrated Prime Minister. In the live broadcasting program for an interview of Tokyo Broadcasting System right after dissolution of the House, Shinzo Abe exposed hysteric complaint on video footage of street interview about the election, which was mostly negative on Abe’s economic policy. “It is the voices on the street. You selected it. It’s strange, isn’t it?” told Abe in front of TV camera. Some reports indicated that the pressuring action was ordered by Abe.

Most broadcasters admitted that they received the request from LDP. They uniformly told that they would fairly report as they had been. Only Japan Broadcasting Corporation, or NHK, rejected releasing comment on even whether they received it. It is unclear what is fairness. “Fairness will be interpreted as LDP likes. I can see their intention to control journalism,” told a TV reporter to Nishinippon Shimbun.

Chief Cabinet Secretary, Yoshihide Suga, criticized the Government of South Korea on indictment of Seoul Bureau Chief of Sankei Shimbun. “It is extremely regrettable in the perspective of freedom of speech that should most be respected in democratic nation and of Japan-South Korea relation,” told Suga in the press conference on Thursday. Embarrassingly enough, his words returned to his administration.

It was not simply a matter of making things straight, because the administration had a specific power to oversee broadcasters. It is nothing but a intervention of editing right of each TV station, which a democracy would not do.

Legislative Branch in Unconstitutional Situation

It is another denial of legitimacy of the Diet by judicial branch. The Supreme Court of Japan on Wednesday delivered a decision that election of the House of Councillors last year was held in “unconstitutional situation” in terms of equality of value for a vote. It sharply criticized the laziness of legislators in making necessary reform of election system. However, politicians are still not serious about implementing people’s equality under law. So, whom are they representing?

In the election last year, an elected candidate in Tottori district had 482,192 eligible voters, while the one in Hokkaido had 2,299,785. Considering necessary vote for a legislator, the value of one vote in Tottori had 4.77 times larger than in Hokkaido. Although the difference was narrowed compared to the election in 2010 with 5.00 margin at most, the Court decided that 4.77 was an extreme difference as unconstitutional.

The Court also labeled the election 2010 as unconstitutional situation. But there were only nine months from the time when the decision on 2010 election was made to the election in 2013. The Supreme Court, on the other hand, recognized the difficulty of achieving necessary reform in that short period. If the Court had realized the time was ample enough, the election would not have been “in unconstitutional situation,” but “unconstitutional.”

Four Justices out of fifteen added negative opinions, all of which regarded the election was unconstitutional. One of the four, former Chief of Cabinet Legislation Bureau Tsuneyuki Yamamoto, opposed the Court decision, referring the election to have been invalid. While the Supreme Court had been avoiding a decision of invalid election with concern of political confusion, Yamamoto became the first Justice who revealed that strong opinion.

As long as the House keeps the principle of one legislator one vote, the inequality will not be eliminated. It will be possible that lawmakers with a few voters make a decision against others with a large number of voters.

Possibly with immature democracy, legislators are mostly ignoring the decision, eroding trilateral separation of governmental power. “Well, we are doing our best, you know,” was the typical response to the Court’s requirement. The House of Representatives has the same problem now. Not only they could not stop current Prime Minister ignoring legislative branch, as seen in Cabinet decision on collective self-defense right, the legislators cannot guarantee human right for equality in political participation.

Divided Bank of Japan

The monetary easing of the Bank of Japan late October was the second surprise, following the first in April last year, led by Governor Haruhiko Kuroda. Record of its Monetary Policy Meeting, however, revealed that there was a sharp dispute on the additional monetary easing among the policy board members. The policy was made by dismissing the opposition, which was worrying about negative impact on small and middle businesses. The fact was more surprising than the policy.

The additional monetary ease was for increasing quantity of money being supplied to the market from ¥60-70 trillion to ¥80 trillion by buying long-term governmental bond. Kuroda explained that the decision was to prevent the risk of delay of shifting deflation mind. Stock market actually welcomed that bold monetary policy, exposing significant rally in Nikkei Average right after the decision.

But the decision was not made with friendly discussion by the board members. Supporters of additional easing thought that market would regard BoJ to have broken promise to achieve commodity price hike by 2%, if decision would not be made. They expected that the positive action would support economic revitalization.

However, negative members were worried about credibility of BoJ. The decision meant that most long-term governmental debt would be bought by BoJ, which might be recognized as financing for governmental budget. One member argued that the expectation of future inflation driven by the additional monetary easing would be limited.

Another negative element was cheap yen against dollar. Overwhelming recognition for negative members was that cheaper yen would have negative impact on small and middle businesses that had been supporting the economy. After the additional monetary easing, gas price has been keeping high level, annoying local people who were dependent on automobile for their daily life. Among nine members, four firmly opposed the decision, which became a rare case in the history of its policy meeting.

That discussion symbolically indicated that Abenomics was passing a corner. Damage of Abenomics on small and middle businesses has been obvious. BoJ was trying to fix the problem with additional monetary easing. But it was based on a notion that Prime Minister Shinzo Abe would be making effort to improve the balance of governmental budget by raising consumption tax rate as planned. As everybody knows, Abe did not do that. Monetary policy and political decision started making contradiction. Abe ignores the opinion that says it is the time for change.

Still Geologically Moving

Japan suffered from another major earthquake in northern Nagano prefecture in the late night on Friday. The quake shook Nagano city and some small village around with sixth degree, which was equivalent to what most cities in Tohoku experienced in the East Japan Great Earthquake three years ago. The suffered cities were within the area where great earthquakes had been occurring repeatedly. It reminded the Japanese people of the fact that they were living on the nest of earthquakes.

Japan Meteorological Agency announced that the quake occurred ten kilometers deep in northern Nagano area with the magnitude of 6.7. According to research of the prefectural government by Monday, forty-four injured and one hundred forty-one houses were destroyed by the quake. Nagano Prefectural Office named the quake “Kamishiro Fault Earthquake in Nagano Prefecture.”

The quake broadly affected transportation system. Bullet trains of Tohoku, Nagano, Joestu, Yamagata, Akita and Tokaido temporarily stopped right after the quake. Warning buzz rang in the second, third, fourth and sixth buildings of Kashiwazaki-Kariwa Nuclear Power Plant owned by Tokyo Electric Power Company. Fortunately enough, there was no leak of cooling water in the pool for used nuclear fuel rods.

Geologists were suddenly dispatched to northern Nagano. They found continuous upheaval with eighty centimeters high and one kilometer long along with Kamishiro Fault. The fault, affiliated to Itoigawa-Shizuoka Tectonic Line, is known as highly active. The upheaval was created by pushing power from both sides of the fault. Geospatial Information Authority announced that land surface around the hypocenter moved twenty-nine centimeters to southeastward and sank by twelve centimeters.

Experts have named the area around Kamishiro Fault “concentrated distortions belt.” With moves of earth’s crust, pushing power comes from both east and west. There is an enormous number of active faults underground of the area. After the great earthquake in March 2011, possibility of earthquake in Nagano area, as well as other area, was thought to be increased.

Measures for disaster prevention have been nothing more than building quake-proof houses and offices. Tax money has been poured into renovation of buildings or developing new technology. This is the limitation of the politics of Liberal Democratic Party. They have a little idea to make viable evacuation plan, as seen in their nuclear energy policy. They need to change their mind from going forward to looking back a while.

Amateur Campaign Platform

Democratic Party of Japan released its campaign platform for the election of the House of Representatives next month. Criticizing the economic policy of Prime Minister Shinzo Abe, the party upholds a concept for increasing middle class to stabilize Japanese economy. But there is no actual plan for growth strategy, which was also a problem in the last administration of DPJ led by Prime Minister Yoshihiko Noda. The policies have fallen short of promise to the people as a party that would be able to be a leading party.

Pamphlet of the policy package starts with denouncement of Abe’s handling of the government. “It is the time for change the stream,” it says. To deny Abenomics, it raises a statistic of consecutive decline of real wage for fifteen months, while unofficial employment with unstable status and low wage has been increasing during Abe administration. Drawing attention to unilateral Cabinet decision on exercising collective self-defense right and passage of the Designated Secrecy Bill, DPJ appeals wrong handling of Abe.

However, the platform is not enough to convince voters that DPJ is reliable to lead the nation. While it criticizes Abe’s monetary policy, which brought excessively cheap yen, it presented no actual alternative. “We support families, middle and small businesses and farmers and fishermen through subsidy. We will ask the Bank of Japan a flexible monetary policy that considers situation of people’s life,” the platform says. So, what is flexible monetary policy, anyway?

As growth policy, it seeks policy concentration in “green, life, agriculture, forestry fishery, middle and small business.” No one understands how Japan can achieve economic growth by supporting those industries. Consumption tax hike will be delayed forever in possible DPJ administration, since it only promise postponing of introduction of higher tax rate without any time limit. It is unclear whether the party seeks resumption of nuclear reactors for power generation. “Without responsible evacuation plan, nuclear reactors should not be restarted,” it only says.

Those ambiguities stems from the lack of determination to regain power as a leading party. After terrible defeat in general election two years ago, DPJ had not made necessary effort to organize reliable policy package. DPJ lawmakers were too disappointed, or too naïve, to cooperate each other for rebuilding their party. The biggest reason why Abe decided to dissolve the House exists there. He thought the election needed to be done before DPJ prepares for it. DPJ platform showed Abe’s decision was right to a certain degree.

Hiding Public Eyes

Prime Minister, Shinzo Abe, named it “Abenomics Dissolution.” In his press conference on Friday, the day he dissolved the House of Representatives, Abe defined the general election in December as referendum on his economic policy. Stressing that his strategy to get rid of demonized deflation was still in half way, Abe asked the public whether he could go on his own way. However, the public will answer not about economic question, but his discretional leadership.

It is obvious that the decision of dissolution was made related to determination to delay consumption tax hike. But, no single opposite party opposes that decision, because deteriorated situation of Japanese economy has been obvious to everyone’s eyes. What the people focus on is Abe’s prescription on it. As far as we can see, he has no intention to change the course, which is subsidizing old interests such as construction companies or big manufacturers.

Japanese people have well been aware of pessimistic view of their future. Former administration led by Democratic Party of Japan insisted that Japan would be bankrupted, if the national budget might not be balanced. That was a cause of their decision of raising consumption tax rate. Since Abe has not shown his own idea of get rid of fiscal crisis in the future, voters will not approve his handling of economy.

Focusing on economics must be a campaign strategy to attract public eyes to one issue. One thing Abe want the people to forget is his unilateral decision of exercising collective self-defense right. It was obvious that the United States wanted Japan to have more positive attitude in interpretation of Japan-U.S. Security Treaty. But, it is unnecessary for Japan to reinterpret the Constitution in taking greater role in the operation for protecting Japan from other aggression. Abe took advantage of ignorance of American leaders in U.S.-Japan relationship to make a breakthrough in a long-time security agenda embraced by hawkish leaders.

Another issue Abe wants to hide is nuclear power resumption. Liberal Democratic Party had been hesitant to determine nuclear power as future energy resource. However, Abe approved nuclear power as an important base-load recourse in the Basic Plan of Energy this April. While great skepticism on nuclear power generation still exist in the public, Abe administration is resuming nuclear power generation as soon as the election ends.

It is fair to say that the dissolution and the election will be of Abe, by Abe and for Abe. Even how the decision of the dissolution is up to the Prime Minister, this politics is too discretional. Voters need to realize the meaning of the election.

Subsidy and Subsidy

As if saying “It’s the economy, stupid,” the leading party is focusing on policies for economic stimulus. Along with the decision of postponing consumption tax hike, Liberal Democratic Party and Komeito started deliberate discussion over supporting economic growth. That was the policy focused on application of lower tax rate for some commodities closely related to daily life. They go and back between taxation and reducing the burden of tax.

Having supporters mainly in lower and middle class families, Komeito took initiative for introducing reduced tax rate. It firmly required that lower tax rate at the time when consumption tax would be raised from 8% to 10% in April 2017. It is an obvious measure for luring its political supporters with an attractive campaign promise. However, there is a big problem to be solved until the introduction, which is how to select the commodity for the lowered tax rate.

Heading to the December election, both leading party are delivering indiscriminate stimulus policies for attracting the voters. To the middle and lower classes, they consider distributing “premium gift card” to encourage positive purchase. For eco-conscious housings, there will be money point. Subsidy for families with little kids will be increased.

Concerning negative trend of middle and small businesses in asset investment, the leading parties uphold subsidy for energy-saving investment. For the business in short of capital, they will supply needed money. Rice farmers will receive subsidy as the supplement for price down, the same policy Democratic Party of Japan had taken and LDP sharply criticized. Corporation that positively promotes woman workers will be

supported by another type of subsidy.

Those policies are the consequences of typical and old-fashioned way of LDP politics. This party has been subsidizing its supporters, which are represented by farmers, small business owners or construction firms. However, helping its supporters had not proven to be contributing economic growth of Japan as a whole. The campaign promises the voters can see are not something related to growth strategy in Abenomics, but discretional use of national budget for surviving the leading parties.

Since welfare has not been a field of LDP’s superiority, supporting policy for pension recipients will be cut, because it counted on introducing new tax rate next year. Once the budget resource has eliminated, LDP politics becomes cool for weak people.

Unilateral Use of Power

The House of Representatives was dissolved on Friday. Who did that? It was not Prime Minister, Shinzo Abe, but the Emperor. The Constitution of Japan determines that dissolution of the House is one of the Emperor’s acts in matters of state. Those acts are done with the advice and approval of the Cabinet. Prime Minister is the head of the Cabinet. That is why Prime Minister is said to have power to dissolve the House. Even so, it is said that the decision this time was an excessive use of his power.

There are only two ways for dissolution of the House of Representatives. One is when the House passes a non-confidence resolution, or rejects a confidence resolution, of the Cabinet. This is called Article 67 dissolution. Another is when the Cabinet exercises its power to advice the Emperor to dissolve it. It is Article 7 dissolution. Abe chose Article 7 as the cause of his decision.

However, Abe still cannot explain the reason why he needed the dissolution now. He told that democracy required hearing people’s voice when it mattered taxation. But no other opposite parties opposed Abe’s decision to delay consumption tax hike. Voters who want to postpone the tax policy will not necessarily vote for Abe. For those who think the taxation should be done without delay have no party to vote for. The election will not work for referendum of taxation.

Abe also appeals that this is a referendum of Abenomics. Eighteen months delay of taxation is to buy time to wait for positive consequences of his economic policy. He is waiting for positive circulation of better balance of corporation budget, higher wages and positive individual consumption. Abe and his colleagues firmly believe that it will arrive soon.

The opposite parties criticize that Abenomics has been collapsed. “As long as Abe only deal with pouring money into big companies,” they say, “it will not be trickled down to the basic level of Japanese economy.” Democratic Party of Japan asserts that the economic policy needs to directly deal with middle class, which has to be thicker and more stable. It is simply a continuing of their former policy, as a matter of fact.

While leading parties, LDP and Komeito, occupy 326 seats in the House, the opposites have 153. Among the opposites, Your Party will be dissolved before the election day. With current reform of the House, the quorum will be reduced from 480 to 475 in this election. Simple majority will be 238. While Abe set the goal of the election at 238 seats or more, the leading parties agreed with the borderline at 266 or more, the number which enable the leading party occupy all the chair persons in committees. It will not be easy for Abe to reach that line.

Dissolution of Your Party

Blown by the unilateral decision of Prime Minister Shinzo Abe to dissolve the House of Representatives, one opposite party decided to dissolve itself. Lawmakers in five-year-old Your Party, which had been suffered from consecutive power struggle inside, agreed with breaking up their party later this month. They want to be rescued by other parties to maintain their seats in the House. But it is not so easy to survive.

Your Party has been separated in two groups, one was seeking merge into Democratic Party of Japan and another was looking for cooperation with Abe administration. Current President Kei-ichiro Asao has been discussing with the leaders of DPJ to raise integrated candidates in the electoral districts, based on bitter experience of independent candidacy in each district caused sweeping victory of Liberal Democratic Party, common enemy of them.

A troublemaker of Your Party was former President Yoshimi Watanabe, who stepped down with his money scandal earlier this year. He was known as a deliberated reformer against bureaucratic rule in the government, when he was Minister of Executive Reform in the first Abe administration. After Watanabe resigned as the minister with the break down of the administration, he left LDP and established Your Party with Asao or other colleagues.

But it is likely that Watanabe could not criticize his former boss after coming back as LDP Prime Minister. He led Your Party to support ill-reputed Designated Secrecy Law and reinterpretation of the Constitution to exercise collective self-defense right. On the other hand, cooperation with LDP eroded Your Party’s original policies such as getting rid of nuclear power generation or prioritizing political reform to raising consumption tax rate.

The dissolution of Your Party showed hard situation for a third party to survive in basically bipartisan election system. To defeat firm coalition between LDP and Komeito, the opposite parties need to be integrated, leaving no room for the third party. In the last election of the House of Representatives, Restoration Party was the third position a little behind DPJ. However, the party was separated between Future Generation Party and Innovation Party. Reorganization of the opposite parties resulted in fragmentation of powers.

It is necessary for DPJ, as the biggest opposite, to include those refugees in party reform. However, DPJ is originally a union of lawmakers with different idea. Accepting too many lawmakers will cause further trouble inside. Policy discussion is definitely needed for reinforcement of the opposite power.

Contradiction in Reasoning

Prime Minister Shinzo Abe officially made two major decisions on Tuesday. One was to delay the starting of new consumption tax rate of 10% for eighteen months from October next year, and another was to dissolve the House of Representatives next Friday. Which was more important for him? It was the dissolution, definitely. However, each of the decisions has fatal contradictions to persuade the legitimacy of his idea.

As Prime Minister, Abe has reiterated his conviction in his economic policy for these two years. “There is no way other than simultaneously seeking both economic revitalization and fiscal rebuilding,” has been his ordinary appeal to the public. He could not put any one of those two options, fiscal stimulus and further taxation, aside. That was, in other words, stomping two pedals of acceleration and brake in a car.

His announcement on Tuesday was a declaration of policy change, which prioritized economic growth to consumption tax hike. Abe explained that if he could keep on stimulating three more years, there would be a chance to raise the tax rate. But a question still remains: where had his promise to seek both growth and fiscal rebuilding gone? The fact is that fiscal rebuilding will be delayed for eighteen months to buy time for continuing Abenomics. Implementation of achieving targeted primary balance in 2020 becomes less possible. Although one of the two options was dropped, Abe still insists that both will be achieved. That is one contradiction.

Another contradiction was the reason of the dissolution. Abe explained that he kept on saying that his government was going to raise consumption tax rate as scheduled. According to his idea, he needed to hear public opinion as far as he would be doing something different from what he had promised. That was his reasoning. To support his theory, he drew an old principle of democracy, no taxation without representatives. “As raised in the Independence War of America, no taxation without representatives is a basic concept of democracy. In short, taxation is democracy. That is why I ask election to get approval in my decision,” said Abe.

It does not make sense, Mr. Prime Minister. The concept was to assure that the decision on taxation should not be done by discretion of a political leader, but with approval of the people. You are not asking taxation, but postponing taxation, to which the people basically have no opposition. If you uphold democracy in taxation, why didn’t you ask people’s opinion through an election, when you raised the tax rate from 5% to 8% in April? Not asking opinion in taxation and asking it in delaying taxation contradicts each other.

After all, Abe simply wanted to maintain his administration as long as possible by dissolving the House in the best timing. It is better for him to say that he did what he wanted to do than introducing a complicated reasoning, which he is not good at.

This Is Recession

While Japanese media stressed on political aspect of the slump of Japanese economy, foreign news organizations firmly labeled it as recession. The Cabinet Office released temporary report on gross domestic products in the third quarter of this year, which indicated annualized -1.6%. It was far lower growth than private economists expected, which had been around +2%. Prime Minister, Shinzo Abe, is planning to announce on Tuesday suspension of further consumption tax hike in next October and dissolution of the House of Representative to obtain endorsement of the public on his handling of the government. However, it is unlikely that Japanese economy will get rid of deflation under Abe administration.

Main reason of minus growth was individual consumption, which marked as low as +0.4% based on the previous quarter. It proved an argument that increase of wage had been lagging behind of inflation of commodity price. Low resilience from the damage of consumption tax hike in April was apparent in purchase of cars, personal computers and household appliances such as washing machines or refrigerators. Investment on housing and industrial asset investment showed retreat in two consecutive quarters.

Abe’s announcement of postponing tax hike means a significant policy change. He has been saying that there would be no other way than getting rid of deflation with Abenomics, or policy mix of monetary, fiscal and growth strategy, along with balancing national budget. Rescheduling of tax hike is nothing but dropping the option of fiscal reconstruction.

Response to negative economic tendency was divided, depending on each standpoint. Subsidized by Abenomics, major corporations were optimistic about the future of economy. But growing negativism overwhelmingly covers micro-economy. Retailers including department store and supermarket feel nothing strange on the outcome of the third quarter, because they already had known it. Housing makers realize that decline of yen’s value has affected higher price of building materials. “Salary of employees will not be raised only by request from the government,” complain owners of small business.

Political survival of Abe administration will not lead to defeat this recession, because he will not change the course of trickle-down theory. Money injected into major corporations will be consumed by themselves before flowing into smaller entities. Workers’ wage will not encourage individual consumption under this economic policy. Credibility of Japanese economy will be fatally eroded with solidified long-term debt.

Away from Mainland

The people in Okinawa unequivocally exhaled their accumulated frustration against the national government of Japan. In the gubernatorial election in Okinawa, a candidate who firmly opposed the relocation plan of Futenma U.S. Marine Base to Henoko district of Nago City defeated incumbent governor who decided accepting the plan. Ignoring fundamental rule of democracy, Japanese bureaucrats do not show any attitude to change the plan. But what we are seeing is that Okinawa has made one step away from mainland of Japan, or one step toward secession.

The margin of obtained votes told unshaken determination of the people to reject the policy of national government. While former Mayor of Naha City, Takeshi Onaga, collected 360 thousands of multi-partisan votes, incumbent Hirokazu Nakaima lagged behind with 261 thousands. Onaga’s message, “I never allow military base in Henoko,” was overwhelmingly embraced by the voters. Nakaima’s “we do not have any alternatives” sounded as justification on his appeasement to national government.

The Ministry of Defense started drilling research in coastal area of Henoko in August. It basically keeps its policy to build new base there, regardless result of the election. It relies on official procedure that was made by incumbent governor. Dismissing democratic process of people’s expression on governmental policy, the Ministry expects actual construction of military base in Henoko next year.

Onaga will make his best to stop those processes. He indicated dismissal of Nakaima’s approval for the construction, which national government would definitely need to continue the construction. Onaga also considers rejection of request by national government for any minor change in current construction plan. It is regarded as an effective disturbance against national government.

What we will likely to see in coming months is Ministry of Defense keeps on building process and excluding protesters around there, people in Okinawa further accumulate their frustration against Tokyo and Washington, and China closely watching deterioration of security environment of Japan-U.S. alliance around Okinawa.

What U.S. needs to realize is that Okinawa will never be reined in by oppressive procedure of security policy by Japanese government. Even if both governments can finish the relocation of Futenma to Heono, anti-government sentiment will remain in the island forever. Rape, robbery or violence by American military will not cease, regardless they are traps or not.

Still Relying on Rebalance

The Japanese government must have received a message from President of the United States as an encouragement. In his address to the students of Queensland University in Brisbane, Australia, President Barack Obama stressed his conviction on rebalancing policy to Asia-Pacific region. He reportedly made a new step in his policy, based on his concern about rising China. However, it is still not clear whether that weakened leader after mid-term election will exercise his full power on facing assertive activity of China in the region.

The trip to Asia must have been a sort of refreshment for Obama from complicated domestic politics. But his long-run meeting with Chinese President, Xi Jinping, in Beijing was something tough for Obama, reminding him of a growing problem in Asia-Pacific region. The speech in Brisbane became a veiled message to China that U.S. would keep its commitment in the region.

Firstly, Obama emphasized U.S. policy engagement in Asia. “I’m here today to say that American leadership in the Asia Pacific will always be a fundamental focus of my foreign policy,” insisted Obama. Quoting skepticism on U.S. rebalancing policy with growing involvement in Islamic extremism or Ukraine crisis, Obama tried to maintain U.S. credibility in Asian nations, saying “meeting those other challenges in the world is not a distraction from our engagement in the region, it reinforces our engagement in this region. Our rebalance is not only about the United States doing more in Asia, it’s also about the Asia Pacific region doing more with us around the world.”

Japanese media quoted a part of Obama’s speech as warning against China, when he said that “an effective security order for Asia must be based – not on spheres of influence, or coercion, or intimidation where big nations bully the small – but on alliances of mutual security, international law and international norms.” Japanese newspapers, as some foreign media like Reuters, recognized Obama speech as a renewed commitment to Asia-Pacific.

It is too early, however, to believe in Obama’s words on U.S. commitment to Asia-Pacific. Once he gets back to his home, he will meet a bunch of problems to be tackled with. Whether U.S. will send ground troops to Syria or reinforcing sovereignty of Ukraine against aggressive Russia is ongoing problem. Urgent issue in Asia-Pacific is Trans-Pacific Partnership at most. Although Japanese policy makers insist on the commitment of U.S. to the security of Japan, the fact is that the implementation of the alliance will not be so reliable.

Coalition of the Opposites

Hastened by abrupt political maneuver of dissolving the House of Representatives by Prime Minister Shinzo Abe, the opposite parties are making their utmost effort to regain power in the Diet. To avoid friendly shot each other in some election districts, Democratic Party of Japan, Japan Innovation Party and Your Party have got involved in discussion for their integrated candidates. Abe’s gamble for his ambition to obtain four more years may urge reform of other parties.

DPJ and Your Party embarked on official talk for merging both parties. President of DPJ, Banri Kaieda, and Presient of Your Party, Keiichiro Asao, met on Friday and basically agreed with cooperation for next election of the House of Representatives. It is reported that the talk was based on a possibility of integration of both parties, along with supporting each other in some districts and considering common campaign promises. The name of integrated party will be DPJ.

It is not surprising that both parties are integrated, because Your Party has a number of members who once affiliated to DPJ, except the founding leader Yoshimi Watanabe. Asao was known as an eloquent policy expert in DPJ, before he left the party with frustration on its election policy. Some leaders in Your Party said that they are looking for other participants of the coalition.

Innovation Party has partly the same structure as Your Party, which embraces a number of former DPJ legislators. They left DPJ because of their opposition to the party leadership, which was controlled by old-type leaders such as Ichiro Ozawa, Naoto Kan or Yukio Hatoyama. While the influence of those old names has been eliminated, it is a preferable time for those runaways to get back to the old home.

Joker is co-leader of Innovation Party and Mayor of Osaka, Toru Hashimoto. He has strongly been criticizing DPJ, denouncing it as one of the world old-interest groups. This novice politician has no idea for compromising to DPJ for his cause of reforming the country. Even though the party legislators consider campaign coalition with DPJ, he keeps on saying “I don’t like DPJ,” like a little kid.

It is unclear that the opposition parties can make a grand coalition enough for threatening the leading coalition by Liberal Democratic Party and Komeito. The fact is, however, that the share of the leading parties in the House of Representatives is far higher than actual electoral voters they had gained in last election. If the coalition of the opposite parties stands to some extent, it is likely that the leading parties will significantly lose their seats in the House. Then, Abe’s gamble will turn out to be failure.

True Reason for Dissolution

Colleagues of Prime Minister Shinzo Abe in leading parties explain that the main reason for dissolution of the House of Representatives is to hear public voices on his possible decision of rescheduling consumption tax hike. Only a few people who are familiar with behavior of politicians believe in that story. Decisions of dissolution have always been political maneuvers. Abe obviously looks at extending his term as long as possible for his big project, amendment of the Constitution of Japan.

Abe has been suffering from money scandals of Ministers in his cabinet. Stepping down of Minister of Economy, Trade and Indutry, Yuko Obuchi, and Minister of Justice, Midori Matsushima, was unpredictable accident in the handling of his administration. As its collateral damage, other Ministers were also included in turmoil of money scandals, which seriously eroded credibility of Abe administration. It was apparent that Abe wanted to put that vicious circle to an end.

There will be no single issue that dramatically boosts Abe administration in coming months. The government is going to decide resumption of nuclear power reactor in Sendai plant as early as the beginning of next year, which will cause great protest from anti-nuclear groups, because Abe has been acknowledged as reluctant to explore renewable energy. It is highly likely for Abe to lose its supporting rate after the decision.

Having no alternative choice, Abe needs to make a deal in Trans-Pacific Partnership, the issue which Barack Obama administration has to achieve positive outcome for taming the Congress with GOP majority in both Houses. It is inevitable that certain amount of agricultural voters will leave Liberal Democratic Party because of its betrayal against them.

Abe believes in a possibility that he can cover all those negative elements in the future by early election, if he wins. Before excitement of election goes away, he is going to appeal the legitimacy of his agenda to be endorsed by the voters. If he wins four more years, it will be the longer administration than his political mentor, Jun-ichiro Koizumi, had in early 2000s.

What he wants to do in next term is amendment of the Constitution. After he used the method of reinterpretation to exercise collective self-defense, the momentum for the amendment seems to have declined. Abe needed certain period of time for discussion on what points the Constitution should be changed. But after all, it is the story if Abe can win. There is no guarantee that Abe can maintain his administration after the election so far.

Abandoning Tax Hike

According to news reports, Prime Minister Shinzo Abe seems to have decided not to raise consumption tax rate from current 8% to 10% in next October. He is supposed to announce the timing to be one and a half year later, or April of 2017. The basic recognition is that Japanese economy after raising the rate from 5% to 8% this April has been too weak to withstand further taxation. But, 10% tax was already legislated before Abe took his seat of the Premier. After all, escaping from tax hike means the failure of Abenomics.

According to Mainichi Shimbun, Abe consulted with Secretary General of Liberal Democratic Party, Sadakazu Tanigaki, about the decision of tax hike last Friday. Against Tanigaki’s suggestion that tax hike should be raised as planned, Abe revealed his intention to postpone the timing of tax hike. “I need to explore the timing of dismissing the House of Representatives,” told Abe, indicating his determination to have election.

Abe has been saying that he would decide whether tax hike should be done or not after watching gross domestic products in the third quarter of this year. It has been discussed that the stats must be so terrible that Abe had no choice except avoiding further negative impact on economy. His economic advisers have also been negative for raising consumption tax rate until economy would regain good health. But the decision may generate antagonism in Ministry of Finance, which has been counting on new revenue resource.

One obvious thing is that Abe did not have a gut for believing in resilience of Japanese economy. Closely watching the economic situation after this April, he thought further taxation would fundamentally damage Abenomics, which was aimed for getting rid of deflation. “It is hard for economy to raise consumption tax rate two times in a short period,” revealed Abe to his aids in the leading parties.

Postponing consumption tax hike will cause various troubles in fiscal policy. The target of generating fiscal primary balance by 2020 will be doubted internationally. Total sum of governmental debt, both nationally and locally, already exceeded ¥1 quadrillion. Although MoF argues that cutting welfare expense is indispensable, politics has been reluctant to do that. 10% tax has already been built in economy policies.

Consumption tax hike was regarded as an important measure for maintaining the level of social welfare service. Nevertheless, Abe administration wasted money too much in building infrastructure up. The fact is that economy has not been recovered by positive investment on traditional interests. It makes no sense for the government to attribute their failure to the increase of social welfare, which has well been predicted.