The Japanese Constitution and Its Economic Policy Consequences

1. The Japanese Constitution and Its Economic Policy Consequences Conference on the Japanese Constitution Panel on the Constitution’s Influence on Japan’s Global Relations The University of Michigan April 15, 2011 Jun Saito, Ph D Assistant Professor Department of Political Science Yale University

2. Outline • Constitution and Economic Policy • Japanese Constitution and Econ Policy • LDP as an Endogenous Party • Exchange Rate Regime and the LDP • Political Instability and Bicameralism 6. Conclusions

3. 1. Constitution and Economic Policy • Variation in constitutional design • Presidentialism vs. parliamentalism • Electoral institutions • Intergovernmental relations • Outcomes • Structure of commitment and mechanism of leadership selection • Party vs. individual • Programatic vs. clientelistic • Trade policy • Pork barrel

4. 2. Japanese Constitution and Economic Policy • Parliamentalism + Bicameralism • Policy change happens iff the incumbent party wins three consecutive elections. • Otherwise, policy gridlock • Unitarism • Large spending by local governments + small revenue base • Soft budget constraint • Local politicians as campaigners

5. 3. LDP as an Endogenous Party • Early postwar Parliament • Instability and low legislative productivity • Frequent party switching • Over-nomination of candidates • One big conservative party • Long-term dominance predicted • Institutional safeguard • LDP as a regime of “perverse accountability”

6. Votes Seats

7. Theory of the LDP • Perverse accountability • Voters’ expectation of the long-term grip of power • Voters competed against each other and held themselves accountable to the LDP • Outcome • Machine politics, interest group politics • Delegation to the bureaucracy

9. Japanese Ballot 斉 藤 淳

11. Municipal Assembly Size as a Concave Function of Municipal Population Merging municipalities reduces overall no. of Municipal assembly members. 11

12. 1998 Upper House PR Vote Share

13. No. Municipalities 13

14. Votes Seats

15. 4. Exchange Rate and the LDP • Mundell-Fleming Model • Fixed exchange rate: fiscal expansion effective • Floating exchange rate: monetary expansion effective (fiscal ineffective unless accompanied by monetary expansion) • Electoral implications • Fiscal – targeted spending • Monetary – not so

16. Business Cycles and Elections

17. Exchange Rate and Election

18. 5. Political Instability and Bicameralism • Lower House • SNTV (1947-1993) • SMD + PR (1996 - ) • Upper House • District + Nationwide

19. Loosemore-Hanby Index weighted by # of seats

20. Upper House and Political Instability • Upper House electoral loss and leadership change • Miki, Hashimoto, Abe • Coalition politics • Preference outliers and Futenma Base • Commitment to non-change

21. 6. Conclusions • Bicameralism and political instability • One-party dominance as functional needs • “Big coalition” with fragile leadership structure • Clientelism vs. stability • Constitutional reform • Removal of Sangiin or introduction of fixed-term executive (effectively presidential institution)