Japan’s Leadership Vacuum: Is It Time to Bring Back Koizumi?

As a communalistic society built on consensus-based decision making, mutual agreement and compromise, strong & decisive leadership has never been strongly encouraged by Japanese society as a whole. In the West, the most successful companies are oftentimes founded on a meritocratic basis, and are led by strong and competent CEOs with sound business acumen (see Steve Jobs, Rupert Murdoch and Warren Buffett). By contrast, Japanese corporations are managed by a wide board of directors chosen based on seniority and his/her dedication toward the company over the course of each individual’s career.

Now, this difference is one that many are already aware of, and one that has already been mentioned on several occasions, notably here, here and here. There are also many books comparing and contrasting the differences and similarities between Japanese and Western-style executive management, sometimes to a degree of near-incomprehensibility. No; today’s entry is not intended to fully understand the intricacies between both, but rather note its significance to and application in Japanese politics in the larger scheme of things; and why I think Koizumi should be brought out of retirement and back into the political spectrum – to shake things up as he was so adept at doing during his tenure.

Now, to understand why the leadership situation in Japan is the way it is, it is important for observers to first understand the way things are done in the Land of the Rising Sun. And to understand the way things are done in Japan, we must first look at the root of humanity and what makes society tick: education.

There’s no question that the pre-university education received by most Japanese is one of the hardest in the world. Though the standard has been relaxed in recent years, the Japanese curriculum outlines course material a year ahead of its Western-taught equivalent. The result is a highly educated workforce capable of the most infinitesimal of calculations, and that is able to take (and in many cases, pass) difficult entrance examinations that predetermine one’s future career and prospects.

The problem and unfortunate downside to this systematic approach to learning are students who are able to memorize and spit out formulas, but are unable to apply these concepts practically and in an analytical manner. By the time they hit working age, such skills become absolutely useless to the majority of graduates anyway. In Japan, you see, jobs prospects and advancement up the corporate and public ladder are based more on loyalty to his/her organization and who you know rather than your ability to solve an issue using said skills. Students – now adults – never develop the ability to think critically, and approach every problem in the same way that they have done in the past.

This lack of analytical thinking, compounded with the societal push for conformity & group-based management, has led the country to use the same approach in its attempt to tackle every problem. If consumer demand plummets, pump money into the system in the form of incentives and tax breaks. To fight deflation, lower the interest rates. To curb the appreciation of the yen, print more money. To promote local industry, build more civil infrastructure and random, superficial tourist “attractions”.  This has led Japan to its current state of economic malaise, and has had its leaders come up with band-aid, symptomatic solutions to the country’s equivalent of needing a triple-bypass surgery.

The only exception to this rule was Koizumi. Though public opinion on the man’s legacy remains split, it is difficult to argue against the work Koizumi put into reforming Japan from inside-out. By the time the now-69 year old veteran politician left office, the fiscal reforms that he had pushed during his five year tenure resulted in 3.2% economic growth in FY 2006, in addition to a 66% rise in the TSE’s stock market index. He was also noted for being the first Japanese prime minister to force lenders to cut bad loans, slashed public spending by 33% and sent corporate profits through the roof (profit margins rose to levels unheard of since Japan pre-bubble). Unemployment during his tenure fell, and wages under his administration rose.

Koizumi, in effect, left Japan better off economically than the Japan he was faced with in 2001. That’s something that (to this day) no Japanese prime minister can say his administration has achieved.

But what made Koizumi work? What made him different from the rest?

Koizumi, you see, was an outlier. Unlike the systematic, robotic approach taken by his predecessors and successors, Junichiro Koizumi stood out as a  leader who stood for reform; a politician who wasn’t so much concerned about his popularity and approval in the party (in fact, he was anything but), but was focused on resolving the core issues that were and continue to plague Japan. Koizumi was not a populist – though he was popular – and did not try to appease everyone (as his successors were so adept at doing), but took a firm stance to most issues and tackled them from a critical and analytic point of view. Koizumi was the anti-stereotype of the Japanese politician, and that served Japan well while he was still in power.

Fast forward 5 years, and Japan is now faced with a political power crisis. Naoto Kan is being pressured to resign, and there are currently few viable candidates for the seat of Prime Minister. Faced with the highest debt to GDP ratio of any country in the developed world; an aging population; deflation and apathy from its youth, what Japan needs now is to wake from its slumber, and to revive the country in the same way that it was during the Meiji Restoration or post-WWII. What Japan needs now is sweeping reform. Who better to bring about said reform than the maverick leader himself?

We should really start a petition. Come back, Koizumi. Japan needs you.