Dilemmas of a Trading Nation by Mireya Solís

Author:Mireya Solís
Language: eng
Format: epub
Publisher: Brookings Institution Press

The Abe Kantei: Centralization Without Wholesale Institutional Reform

After more than three years out of office, the LDP, with its coalition partner Komeito, once again took the reins of political power with a landslide victory (the LDP alone increased its number of seats in the Lower House from 119 to 294) and the decimation of the DPJ (the party’s seats declined from 308 to a mere fifty-seven) in December 2012.18 Most surprising was the comeback of Shinzo Abe, who had abruptly resigned as prime minister due to illness in 2007 and had been the unlikely winner of the LDP’s presidency just two months prior to the snap election. In sharp contrast to his first tenure as prime minister, this time around Prime Minister Abe immediately launched ambitious plans for economic revitalization and followed later with a more proactive foreign policy, including reinterpretation of the constitution to allow for the exercise of collective self-defense.

Announcing that exit from the deflationary economy was his first priority, Abe pressured then Bank of Japan Governor Masaaki Shirakawa to adopt a 2 percent inflation targeting policy and was instrumental in the selection of his successor Haruhiko Kuroda, a strong advocate of monetary easing. Prime Minister Abe proceeded to lay out his strategy for economic revitalization, popularly known as Abenomics, to move along three tracks (or arrows): monetary expansion, flexible fiscal policy, and economic growth through productivity-enhancing measures. Recognizing that structural reform in a contracting economy could quickly exacerbate zero-sum politics (and as seen in the charges of market fundamentalism that were leveled against his predecessor Prime Minister Koizumi), the aim of Abenomics has been to combine stimulus and reform. One of the hardest challenges throughout has been to demonstrate that genuine economic reform will match the expansionary efforts.19

To advance the critical third arrow, Prime Minister Abe buttressed the role of the prime minister’s office (known in Japanese as Kantei) in several familiar ways. He relied on the advisory councils to shape the discussion of important economic initiatives, incorporate private sector members to break the monopoly of the bureaucracy, and enable the prime minister to be the final arbiter in deciding a course of action. To this effect, Prime Minister Abe revived the Council on Economic and Fiscal Policy, but with the new twist of circumscribing its role to macroeconomic issues, as he established a new Economic Revitalization Headquarters to address microeconomic policy issues through the Industrial Competitiveness Council and the Regulatory Reform Council.

The prime minister also resorted to the tried and true formula of designating special portfolio ministers to promote priority policy issues and named his longtime ally Akira Amari as economic revitalization minister in charge of the namesake headquarters, de facto becoming his point man in the pursuit of the economic reform agenda. The emergence of the Abe Kantei leadership owed much to the competence of Chief Cabinet Secretary Yoshihide Suga, who skillfully managed cabinet appointments, maintained internal unity, and went beyond the traditional role of policy coordinator to enforce adherence to policy directives from recalcitrant ministries.

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