Bloated Nation ― Can "Government without Reform" Continue?
―Analyzing the 2021 Elections of the House of Representatives―
Nobuo Sasaki, Professor Emeritus, Chuo University and scholar of public administration
Area of specialization: public administration and local governmental autonomy
The Kishida administration lacking in enthusiasm gains confidence through the elections
On October 31, the elections of the House of Representatives, the first in 4 years, ended. In light of the social changes that had taken place during these years, attention was focused on what the elections would be like, but it appeared that there were few substantial changes. This may have also been due to the effects of the COVID-19 pandemic. In these elections, a total of 465 seats were contested among 1,051 candidates. The election results show that the Liberal Democratic Party (LDP) won 261 seats, the Constitutional Democratic Party of Japan (CDPJ) 96, Nippon Ishin (NI) 41, Komeito 32, the Democratic Party for the People (DPP) 11, the Japanese Communist Party (JCP) 10, and others (other parties and independent candidates) 14 (See chart). The voter turnout was 55.93%, the third lowest in the postwar period.
Compared to the pre-election period, the ruling LDP saw its seats decrease by 15 from previous 276 and its coalition partner Komeito saw its seats increase by three from previous 29. Of the opposition parties, CDPJ decreased its seats by 13 from previous 109, JCP by two from previous 12 while NI increased its seats by 30 from previous 11 and DPP by three from previous eight. The number of seats won by others (other parties and independent candidates) decreased by two from 16 (four vacancies). The difference in number between the seats won by the ruling parties and that of opposition parties decreased by 12. CDPJ, DPP, and JCP worked together to support the same candidates in single-member constituencies, but their efforts did not help increase the opposition's seats (decrease of 12 seats). Rather, they may have ended up as a failure. As a receptacle for voters formerly in support of LDP and CDPJ, NI quadrupled its seats.
As a result, the number of seats held by LDP and Komeito (293) exceeds what is called the absolute and secure majority (261) in terms of parliamentary administration, bringing no major changes to the previous political structure with one dominant party and many other minor ones. When looking at the results alone, it could be said that the Fumio Kishida administration, which was formed 10 days before the House dissolved for general elections, and took over for the short-lived Yoshihide Suga administration of only 1 year that ended just before the term of office for House of Representatives members concluded, got off to a safe start though it lacked in enthusiasm.
In terms of the number of seats won, the Kishida administration seems to have made a start that was not bad, but in the months to come, it faces a mountain of problems from domestic to foreign affairs, including reconstructing people's lives and the economy, both of which have been seriously damaged due to COVID-19, dealing with the aftermath of the Olympics and Paralympics, which were held without spectators after being postponed by 1 year and posted a huge deficit, and restoring abysmal relations between Japan and South Korea and between Japan and China. Can it really bring satisfactory results by solving these problems? The administration advocates "new capitalism" as it aims at raising wages by taking large-scale economic measures to build a favorable cycle of growth and distribution. This seems similar to the previously promoted Abenomics in that the benefits of growth are expected to trickle down to workers, thus making them better-off, but is Kishida's policy all that different? At the very least, Abenomics failed to cause the benefits to trickle down.
The idea is that unless the economy grows, people will not become well-off. The ruling LDP continues to argue so, but as it sees its population decrease significantly, can't Japan become the richest country in the world if it can maintain its GDP at the current level of \500 trillion through high technology over the next 80 years though it stays at zero growth? The reason is that as the population decreases, income per person nearly doubles. Can't they shift to such a way of thinking? Isn't it rather necessary to push deregulation and take measures to revitalize the entire economy? At any rate, the results of the Kishida administration will be called into question during the elections of the House of Councilors next summer.
Has the electoral system which combines a single-seat constituency system with proportional representation degenerated?
When looking at the recent elections of the House of Representatives, I strongly question whether the current electoral system should be maintained. It is not clear what the aim of the 465-seat House of Representatives' current electoral system which combines a single-seat constituency system with proportional representation is. It was launched in October 1996 as part of the political reforms but has become increasingly disoriented with each passing year.
This electoral system consists of two parts: the single-seat constituency system under which one Diet member is elected in each of the 289 constituencies nationwide (289 in total) and the proportional representation system under which 176 Diet members are elected by determining successful candidates in a listed order of candidates according to the number of votes won by each party in each of the 11 blocks nationwide. One exception is that due consideration is given to minority parties, allowing double candidacy, both in the single-seat constituency and in the proportional representation block. Today, double candidacy is being popularized with 87% of candidates in the proportional representation blocks accounted for by double candidates. How does this appear to the eyes of the general public?
There are many dead votes in the single-seat constituency in which a one-to-one contest is fought, and this makes it difficult to reflect the popular will precisely. A change of government can take place like an Othello board game, but the votes for the defeated party remain dead. Therefore, the system is designed so that double candidacy is allowed, permitting the election of candidates within the range of the number of votes won by their party in the proportional representation block if the margin of defeat in the single-seat constituency is small. However, this was intended to be an exceptional measure. As the number of double candidates have increased up to today's level, it is unclear what the very meaning of proportional representation is.
To put it plainly, isn't this a device to relieve unsuccessful candidates in single-seat constituencies? Is it not a system that allows Diet members to protect each other? Incidentally, the percentage of single candidates in the proportional representation blocks is only 13%. How are they different in quality from double candidates, who represent 87% of the total? In the recent elections, 72% of successful candidates (126 persons) in the proportional representation blocks were defeated in the single-seat constituency.
This means that the 11 proportional representation blocks nationwide exist simply to complement the single-seat constituencies and relieve unsuccessful candidates therein. With eight single-seat constituencies having three double candidates, 110 having two, and 176 having one, the number of candidates who were defeated in the single-seat constituency but elected in the proportional representation block amounted to 126, and that of successful single candidates in the proportional representation blocks was only 58. This shows that the electoral system degenerated. This is not the way that it was originally designed. Initially, it was designed to maintain the diversity of the House of Representatives by combining 300 members from single-seat constituencies that represented areas with a population of 400,000 each and 180 members from 11 wide-area blocks such as Tohoku and Kyushu ("states" in a sense), who are elected according to the percentage of votes won by parties.
The original purpose of the system is to bring the correct public opinion to the House of Representatives by assembling two different types of persons--those with perspectives that focus on small communities and those with perspectives that cover wide areas.
Among the elected members, there is even an awareness of their rank: successful candidates from single-seat constituencies are first-class (gold), candidates who are defeated in the single-seat constituency but elected under proportional representation are second-class (silver), successful candidates from the proportional representation blocks are third-class (bronze), and successful candidates in by-elections held halfway through sessions are steel. Those who are declared elected in place of members halfway through their term of office are described as tin. Until when will such an electoral system based on mutual support, one that is by and for Diet members, continue? Can this system whose meaning is so unclear and difficult to understand really be accepted by the international community?
Rather, we are currently in a period marked by the shift to wider-area operation, higher-speed transport, and more advanced information technology, and as such, people's sphere of life is expanding greatly. On the other hand, the population is decreasing significantly. If the current system is to at least be used effectively, shouldn't the House of Representatives be changed to one of a select few with 300 members by rearranging the single-seat constituencies for a total of 150 members and electing 150 members from 11 proportional representation blocks without double candidacy? If the entire system is to be reviewed drastically in real earnest, shouldn't a Ninth Electoral System Council be established? The current system is old because it is based on the report from the Eighth Electoral System Council in 1991, 30 years ago.
Three policy issues are called into question
It was said that the country faced a crisis of politics lacking points at issue, but three policy issues in the recent elections which are worthy of note are as listed below.
The first issue is that all ruling and opposition parties during the campaign promised to directly provide various allowances and other payments. All parties insisted that they would spend lavishly for cash giveaway: "economic assistance for the non-regular employees" (LDP), "\100,000 uniformly for persons aged 18 or younger" (Komeito), "\120,000 for low-income earners" (CDPJ), "\100,000 for persons who saw their income decline" (JCP), "basic income" (NI), "\100,000 uniformly for all persons plus \100,000 for low-income earners" (DPP), "\200,000 monthly until COVID-19 is eradicated" (Reiwa), and "special stipend of \100,000 for all people" (SDP).
It is true that people's lives have seriously been damaged due to COVID-19. It is natural to help them, but is it necessary to provide cash and reduce tax rates even for those who are not troubled? As a relief measure, how effective is the administrative method of distributing cash directly? Isn't this a typical populist policy in the sense that it panders to the public by maximizing services and minimizing burdens? Can these campaign pledges be truly realized after a service battle not supported by financial resources? Will they prove to be nothing but empty promises? Lip-service politics craving votes ends up breaking its word, saying that nothing comes from nothing. Are losers always in the wrong? Won't the government lose public trust, falling into a bottomless pit? I believe the people have already seen through these tricks.
Another issue is that no party discussed a roadmap for the reconstruction of public finances in Japan, a country with a debt in excess of \1,300 trillion, which finds no parallel elsewhere in the world. "Broader services," all parties chorused with a single voice, but how can they procure funds to support them? This is like putting all you want to buy in a shopping cart, only to find that there is no money in your purse at the check-out counter. Just before the elections, Mr. Koji Yano, administrative vice minister of the Ministry of Finance, warned against failure in the November issue of Bungeishunju magazine, saying that "the national treasury is not inexhaustible" and that "measures to cope with COVID-19 are important, but if shotgun budgets continue to court popularity, the country will sink."
Is there any guarantee that this will not become a reality? What would happen if it does, just as the passengers of RMS Titanic saw a huge glacier appear suddenly before their eyes? Such a panic could be envisaged, but is there any assurance that it won't occur?
The third issue is that 20th-century society which has been marked by continuous growth in the expansion of populations, incomes, tax revenues, and organizations has already ended, and in the future will become a steadily declining society. It is essential to design the development of a new country and push big-boned reforms. During the recent elections, however, there was no argument about such a national vision among the candidates at all. It is often said that if mass media write in the same vein, the formation of sound public opinion is jeopardized, but can't it be said that if politicians speak in the same vein, the future of the country is jeopardized? Does "government without reform" have a bright future? I do not think so. I wonder what the opinion of the general public is.
Since the Junichiro Koizumi administration, Japan's government has continued to deteriorate for 15-plus years. The fact is that this cannot be stemmed. Today, Japan reveals that it is a visionless, powerless, and leaderless country. What the writer Taichi Sakaiya calls the "third defeat" is becoming a reality (Sandome no Nippon (The Third Time for Japan), Shodensha Shinsho). How should this country be reconstructed? Human resources development and other methods of education should drastically be reviewed--isn't this what the government should do and what its reform should really aim at?
Are there ways to avoid a national failure?
During the recent House of Representatives elections, there were only microscopic discussions about the lives of individuals, but with macroscopic, solid arguments were not heard at all. Politicians talk only about the immediate future and lack a long-term view of things. Therefore, I dare to put a question to them.
Are Japan's public finances all right? While the annual expenditure for the central and local governments combined totals \170 trillion, tax revenue falls short of \100 trillion. The gap between the \170 trillion and \100 trillion is filled by debts such as deficit-covering government bonds each year. The graph looks like an alligator opening its mouth, and moreover, the opening is becoming wider each year. Some people say that the alligator has dislocated its jaw. This shows how Japan's public finances have been during the so-called "lost 30 years" since the collapse of the bubble economy, and the measures that have been taken to cope with COVID-19 during the past 2 years have further deteriorated the situation. The government is steeped in the evil habit of paying all expenses easily by issuing government bonds.
Source: Ministry of Finance's website
If the total amount of debts (\1,300 trillion) is divided by the population of 127,500,000, the quotient is \10 million per person. This means that a family of four has a debt of \40 million. It is estimated that the upper limit to the amount of money that can be borrowed by a standard household of four (including one breadwinner aged 40) with an annual income of \7 million is \35 million, five times the annual income. But the family of four already has a public debt of \40 million. The younger generation cannot even obtain a housing loan. The only choice is to become homeless, not exactly a homeless who has to live under a bridge, but the age will come when people cannot afford to have their own house. Who made Japan such a dreamless country!
The cumulative debt of \1,300 trillion is still continuing to rise, but no politician attempts to stop this, nor does he or she talk about how to repay it. One view is that the debt called "government bonds" does not need to be repaid as long as it circulates within the country. It is a convenient logic, but is this true? Isn't this an expedient devised by those who have stopped thinking how to repay it because they cannot depict a scenario for repayment? There is no debt that does not need to be repaid whether it is public or private.
What, then, should we do? There are two possible options. Speaking at the level of national public finances, one is to continue raising tax rates substantially until tax revenue reaches the level of expenditure (\100 trillion), and the other is to reduce public services drastically so that they suit the tax revenue of \60 trillion.
Which of the two do we choose? We would cry out against both tax increases and service reductions. Politicians who consider it most important to be elected would not argue for either of the two as they curry favor with voters. In fact, this is what populist policy is.
So, what should we do? There is no other way but to choose a third path, which is to change the central and local governments to simple, efficient, and wise ones by streamlining their structures as they have become complicated and bloated. Funds should be generated by doing so. The only choice is to push major administrative and fiscal reforms. This allows a reduction of \30 trillion. Essentially, contesting over these reforms would be the ideal form of a House of Representatives election. If these bloated finances continue, the country will sooner or later fall into bankruptcy.
Even cash giveaways to relieve COVID-19 victims require debt repayment
I hate to continue talking about money, but let me speak about payments at the individual level next.
Recall May of last year. Due to the COVID-19 pandemic, both the ruling and opposition parties chorused with a single voice, saying that they would distribute money to all people uniformly. One decision was to distribute \100,000 to each of the 127.5 million people. At that time, however, no one discussed where the money came from, citing the declared state of emergency as the reason. It looked as if money fell from the heavens. But we will certainly have to pick up the bill. This point must not be overlooked.
You may remember the fixed amount of benefit distributed after the failure of Lehman Brothers a little over 10 years ago (\12,000 per person and \20,000 for those aged 18 or younger in 2009). But was it effective? Last year, taking a hint from this benefit, the government distributed \100,000 per person, but was this policy designed so that money was directed to those who really needed it? It is estimated that 70% of people set it aside for savings. The direct distribution of cash by the government tends to expand endlessly. Campaign pledges to spend lavishly in the recent elections are an indication of this tendency. What effects do the benefits advocated by various parties actually bring?
Let us make some calculations based on the practical wisdom that debts must be repaid. Last year, government bonds worth \12.8 trillion were used to pay \100,000 per person. That portion of government bonds is taken up here, but one previous example of repayment is the reconstruction bonds of \11.6 trillion issued after the Great East Japan Earthquake of March 11, 2011. At present, we live under a system where we will continue to repay the bonds for 25 years by paying an additional income tax of 2.1% on a per capita basis. What would happen if this repayment method for reconstruction bonds is applied to the \100,000 COVID-19 benefit? It would be necessary to further add an income tax of 2.4% on a per capita basis as part of the COVID-19 tax increases. Under this system, we should be prepared to continue paying an additional income tax of 4.5%, including a tax increase for reconstruction bonds, for more than 10 years in the future. And subsequently, the COVID-19 tax increase would continue for nearly 10 years.
Of course, this scenario is limited to last year's \100,000 benefit. It does not include the subsequent debts incurred by spending lavishly to cope with COVID-19, including relief measures for business owners. If the situation settles down and the aftereffects of the elections subside, the government may back down from their previous position and propose a COVID-19 bond tax increase exceeding the one mentioned above. The reason is that it cannot make something out of nothing. But today, nearly 70% of people do not pay income tax thanks to the preferential tax system. There is a limit to taxation even if the special income taxation is close to going Dutch.
If the government attempts to repay other huge deficits (debts) by raising the consumption tax rate, the applicable tax rate would be extraordinarily high. The familiar assumption presented every time this subject is taken up is "if the economy grows...." This stance has continued throughout the three administrations from Abe to Suga to Kishida, but Japan has seen zero growth during the past three decades. It cannot be imagined at all that a period of rapid economic growth will come suddenly. If so, the only option would be the third path.
Japan in a paradigm shift--Push reforms wholeheartedly
This country is at a major turning point. It faces major issues it should address while solving current ones. It remains divided into the densely populated Tokyo and the depopulated provinces. This diminishes the country's entire vitality. What should be done with this problem? It is an extremely important issue. It is essential to redesign the country, including resolving the unipolar concentration in Tokyo, reconstructing public finances, dissolving the centralism in the national and local governments, promoting the decentralization of power, and constructing a new government structure that replaces the 47-prefecture system, which has been in existence since 150 years ago, when people traveled on horseback, by ship, and on foot.
To that end, how about reducing the population of Tokyo by 20%? Partly because of COVID-19, there have recently been movements to relocate from the Tokyo area to provincial cities. There is also a change in the awareness of people as they experience working at home and teleworking and seek a more comfortable way of living and a new style of working. Forty percent of people in the Tokyo area, particularly those in their 30s and 40s, are highly interested in living in provincial areas. There are also companies that are considering relocating their headquarters to provincial cities. This is a golden opportunity to dissolve the centralization of government and the unipolar concentration in Tokyo and shift to a country in which power is decentralized and resources are distributed.
For over the past half-century, the government has advanced the Comprehensive National Development Plan (first to fifth) to distribute factories and other facilities to provincial cities which would allow people to live in close proximity to their workplace, but that did not happen. Fortunately, however, three major high-speed transport networks--Shinkansen, expressways, and jetliner airports--have been developed during this interval, making it easier for people to travel.
But if the current centralized system continues to be preserved, the benefits of the three major high-speed transport systems are concentrated in Tokyo, with provincial areas still left impoverished. The hometown tax payment program will not change the concentration in Tokyo.
The government needs to take on the challenge of pushing larger-scale reforms. It should aim at establishing a local autonomy system by advancing reforms for decentralization of power with wide-area provinces as the base for domestic administration. How about substantially reducing travel costs in the current three major high-speed transport networks through government control, thus ensuring a greater liquidity of movements?
Japan is a small country with an area close to that of the American state of California. With three well-developed high-speed transport networks, it does not take much time to travel from one end of the country to the other. It has become a really convenient country. But it is expensive to travel here. This presents an obstacle, preventing companies and their offices as well as people from leaving the Tokyo area. This must be corrected. Therefore, I propose a Japanese-style free pass plan.
The fares for the three major high-speed transport networks should be paid by public funds--practically free of charge. This can be done if \7 trillion is available. If the government is willing to do so, they can be covered by public funds by turning \2.5 trillion from gasoline tax, \2.5 trillion from consumption tax (1%), and \2 trillion from regional revitalization expenses to this purpose. If this can be done, people as well as companies and their offices would start to move in wider areas. As a rule, water gravitates toward lower ground. People and things are concentrated in places where location costs are low and the environment is favorable. This is the time to exert original and innovative use of these networks rather than focusing on road development as in the past.
In addition, the ideal way of locating universities to attract young people should also be reconsidered. Shouldn't large universities such as Waseda, Keio, Meiji, and Chuo reduce their capacity by 20% and allocate extra resources for the purpose of founding branches in provincial areas? This will also allow for better human resources to be developed in these areas.
A Third Rincho should be established for reform
How, then, should reforms be pushed? At major turning points in the past, the Japanese government has always pushed reforms by bringing external specialists together and setting up the Ad Hoc Commission on Administrative Reform (so-called "Rincho"). During the period of rapid economic growth, the First Rincho (1961-1964) was established to expand administrative systems by founding public corporations and agencies.
After the second Oil Shock, the situation completely changed. Amidst the low economic growth, the Second Rincho (so-called the "Doko Rincho"; 1981-1983) was established to concentrate on reforms aimed at reducing the administrative structure under the banner "Reconstructing public finances without tax increases," and reforms included the privatization of the national railways and the telegram and telephone corporation, the reform of local administrative agencies, and the review of public-private relationships.
Forty years have already passed since then, and 20 years have elapsed since the Hashimoto administrative reform aimed at the major restructuring of ministries and agencies. The times have changed remarkably. How should the government system in Japan be as it has entered a period in which the population is decreasing substantially? Huge waste is hidden in the complicated government system which consists of 12 ministries and agencies, 47 prefectures, 1,718 municipalities, and many layers of similar local offices. This is where attention should be focused. No time should be wasted in pushing structural reforms in Japan, including a review of roles divided between the public and private sectors. These should be analyzed wisely. Now is the time to attempt at the reform of reorganizing the country's entire system wisely.
Today, when reforms are delayed due to the political intentions of the ruling and opposition parties, a Third Rincho should be established as a third-party organ. Shouldn't specialist knowledge in various circles be brought together to design how to grant authority to local governments, transfer tax revenue and other financial resources thereto, and shift to a state system?
How about first passing a bill to establish a Third Rincho to gain a foothold for reform in the extraordinary session of the Diet after the House of Representatives elections? In the process of deliberation, "inconvenient truths" such as huge deficits should be exposed before the eyes of people to clarify the direction the country should take in the future. That is the job of politicians. The tradition of politics at Kochikai, an LDP faction of which Prime Minister Kishida is a member, is to advance politics through theory. If the Kishida administration says that it has the ability to listen, it should take such an argument for reform sincerely. Unlike the Suga administration, if it is motivated by opinions it listened to and attempts major reforms, the Kishida administration would become a sustainable one. Nippon Ishin, which leaped into third place in the recent elections, uses being reformist as its selling point. Shouldn't other opposition parties, too, gather to lead these reforms?
Nobuo Sasaki, Professor Emeritus at Chuo University and a doctor of laws
Area of specialization: public administration and local governmental autonomy
Dr. Sasaki was born in 1948. He graduated from Waseda University and completed courses in political science at Waseda University Graduate School. He obtained a doctorate in law from Keio University. He worked with the Tokyo metropolitan government for 16 years. Later, he returned to university and taught as a professor at Seigakuin University in 1989 and at Chuo University Faculty of Economics and Graduate School of Economics from 1994 to 2018. During this interval, he took posts such as visiting researcher at America's UCLA and lecturer at Keio, Meiji, and Saitama Universities. Other posts he took include a member of the government's 31st Local Government System Research Council and the Science Council of Japan (political science) as well as a special advisor to Osaka Prefecture and Osaka City.
Currently, he is Professor Emeritus at Chuo University, guest professor at the Graduate School of Project Design, special advisor to Osaka Prefecture and Osaka City, strategic advisor to Sakai City, and the board chairman of the Nihon Kunizukuri Kenkyujo (the Japan Nation Building Research Institute).
His major writings include Ima Koso Datsu-Tokyo! (Now is the Time to Leave Tokyo!), Heibonsha Shinsho, May 2021; Kono Kuni no Tatamikata (How to Reform this Country), Shincho Shinsho; Aratana 'Kuni no Katachi' (The New 'Shape of Japan') and Oiru Tokyo (Aging Tokyo), Kadokawa Shinsho; Nihon Gyoseigaku (Public Administration in Japan) and Gendai Chiho Jichi (Modern Local Autonomy), Gakuyo Shobo; Chiho Giin no Gyakushu (The Revenge of Local Assembly Members), Kodansha Shinsho; Tochiji (The Tokyo Governor), Chuko Shinsho; and Tocho (The Tokyo Government Office), Iwanami Shinsho.
In addition, he provides commentary for TV programs and newspapers, contributes to journals, and gives lectures in provincial cities.