After just eight months in office, Japan’s prime minister, Yukio Hatoyama, resigned last week. The public reason given was the continued presence of the US military base on Okinawa, but the real reason was the deteriorating financial picture. Nobody knows what to do as Japan threatens to blow up on a scale that would make Greece look like a pebble at the foot of Mt. Fuji. For the fifth time in four years, Japan’s financial hot potato changed hands from an old prime minister to a new.
The new holder is Naoto Kan. He said he wants to “create a government that can implement policies to break through Japan’s 20 years of stagnation.” He says that if anybody has a chance of pulling that off, it’s him: “I come from a regular, white-collar household. If a politician born in the political grass roots can rise to such a weighty post, I think this will be something new for Japan.” Kan’s father worked as an executive at a glass company.
In a story that ran last Saturday, the New York Times quoted Stanford University East Asia researcher Daniel C. Sneider as saying, “More than anything else, what Japan wants now is someone who can take charge and exude a feeling of confidence. Kan has a reputation and track record as a decisive leader. Hatoyama proved himself to be anything but that.”
True on Hatoyama, but will Kan turn out to be any different? So far, not so good. From the same New York Times article: “At least initially, he has seemed to stick close to the policies of Mr. Hatoyama.”
So much for breaking through 20 years of stagnation.
Stagnation is expensive. According to the International Monetary Fund, Japan has the largest public debt among industrialized nations, some 219% of its gross domestic product in 2009.
Today, Kan said in Tokyo during his first address to Parliament, “It is difficult to sustain a policy that relies too heavily on issuing debt. As we have seen with the financial confusion in the European community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone.”
Tradition says it will be left alone until it’s too late. We’ll see if Kan has the guts to break tradition. While newspapers show a high level of public support, word on the street and in ramen shops is that he’s just like the others, “not worth a damn.”
Look insideThe Kelly Letter
Jason—Any chance you can do a piece on how Japan, Inc. has gotten itself into this mess over the past 20 years? What lessons the rest of the industrialized world can draw from Japan’s errors? How not to replicate Japan’s current situation? Thx! -RICH
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