The Democratic Party of Japan’s (DPJ) historic victory is undoubtedly a positive step in terms of Japan’s long-term political development.
Yet it remains to be seen whether this sea-change in politics will be positive or negative for economic growth. It could very well be bad news in the near-term.
What’s peculiar about this vote for change is that the DPJ’s leader and likely prime minister Yuki Hatoyama is actually against many of Japan’s recent economic reforms.
If it weren’t for the historic status of his victory, you could easily mistake Hatoyama for an anti-capitalist.
WSJ: He stands for agricultural protectionism, higher minimum wages, higher taxes in the name of environmental responsibility and more handouts to the elderly, parents and unemployed. He wants to protect small- and medium-sized businesses from competition. His pledges to cut taxes are minimal; his goal to cut fat from the budget, vague; and his commitment to free trade, marginal. The phrase “economic growth” scored nary a mention in his campaign pledges.
While a major advance for Japanese politics, DPJ leadership could easily take Japan backwards economically. Yet at least a precedent has been set, so that Japan can toss them out when the time comes.
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