Mr Abe’s stunning resignation has shocked Japan both with its timing and with its meaning. Unpopular and unimpressive in office, there is almost a sense of relief that this disastrous administration is over. But as Japan experienced in the 1990s one Prime Minister leaving does not guarantee that a better one will take his place. The principal candidates – Messrs Aso, Tanigaki, Fukuda, Yosano and Nakagawa, as well as outsider Ms Koike – are all LDP insiders who will have to face the challenge of achieving electoral popularity with a party platform of traditional values. Those traditional values were espoused by Mr Abe, and look what they did for him, but the LDP is not quick to accept changes in direction. The party might decide that a quick and clean decision is necessary, in which case one of the favourites such as Mr Aso gets the job, or it might decide that it has to face reality and accept more voter-friendly policies, in which case we have a battle on our hands and a less obvious candidate may get it. It will be an interesting week.
The policy implications are vast. The Abe administration did not have a great economic agenda and for the last 12 months the economy has largely been on autopilot, with few major reform initiatives. This has resulted in greater bureaucratic influence over policy making, which while not necessarily a bad thing in the short term, in the long run would result in less market-oriented small government policies. Does the next Prime Minister look at the election results and think that the LDP needs to reconnect with the regions – resulting in some unwelcome pork barrel projects and spending? Or does the next Prime Minister look at the fiscal position and make Japan face up to the awful inevitability of tax rises? And will we have a government which is business friendly and agnostic about the nationality of business? These are important issues; in an environment where the LDP has to court popularity, and where few of the candidates have what one might call an Economist type of policy platform, we cannot be optimistic.
Quoted from the Economist Tokyo