POL215Y1 Lecture Notes - Keiretsu

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12 Mar 2012
Ernie Tam
Lecture #7-Japan’s post war political and economic Development
Post war economic miracle
Developmental state are all important concepts
One party rule
o Liberal Democratic Party’s powerhouse
Throughout its 40 years, the LDP have dominated the political scene. We
will be looking at their powerbase
o Electoral system
o Patron-client relationship and its impact on corruption
Japan’s “lost decade”. Why can’t Japan reform?
o Given you are a developed country, there is no growth in economy
GDP growth rate
Averaged 8-10% in the 1960s and oil prices were growing as well. Since the 1990s on
wards, there is no growth (“lost decade”)
Is there an inherent political explanation for its slow growth rate?
Another peculiar thing about Japan’s politics is that: Japan has a new prime minister every year.
(15-16 months)
o Shows from 1948, the prime minister and the party that they belong to have been
consistently Liberal Democrat.
How can government carry out its policies when government keeps changing?
o Bureaucrats run the show. (meritocratic society)
Japan’s economy was only 7% of US’ economy in 1955. 20 years later, it has become 1/3 of US’
o In addition to rapid economic growth, Japan had gained equitable distributable salary.
The gap between rich and poor was low.
o High education attainment level and long life expectancy.
Developmental state came from Japan and subsequently copied by SK, Taiwan, Singapore and
by China to some extent.
o Meritocratic bureaucratic such as ministry of finance have been fundamental to develop
industrial policy
Industrial Policy
Distorting the rules of the game to favor specific industries
Allocating the country’s scare resources such as land, loans, physical subsidies, tax policies,
export etc…to some specific targeted industry
What industries were targeted?
o High tech industries, automobile, renewable energy
o Protecting domestic companies through domestic guidelines
Some successful Japanese companies suggest that Sony, Honda, were denied any assistance by
Japanese government in the 1960s.
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Ernie Tam
The government was trying to play God and control such industries.
These companies sought the international markets and defy government’s wishes
Japan tried to merge Mitishibi, Hyundai, and Toyota together to compete with the US car
o Much like Dragon Den, Japan is the “dragon” trying to determine what industries were
worth investing in.
East Asian Developmental stateControversial idea.
After World War II, Japan embrace parliamentary democracy but a centralized bureaucratic
national government.
LDP (Liberal Democratic Party)
Formed in 1955. Held majority government 1955-1993, 1996-2007
o More right winged conservative than liberal for LDP
o In 1993, it was defeated by social party.
o Defeated by DPJ in 2007.
o IN 2009 DPJ won a majority in lower house
“Catch all” party
o Trying to catch everyone from all spectrums. Represent all voters
o Its supporters come from agricultural/rural area, small and large businesses.
Powerbase: business elites
o Farmers
Constituted a substantial part of the voters’ base
Regulated rice prices (keep it high) in order to gain support from farmers.
Protected the price of rice and had it left to the market, there would be no rice
paddies in Japan.
The Government strategically chose this industry to invest in.
Government skewed the district territories to inflate the number of
seats/representation in parliament. (Lower population than urban districts but
nevertheless the LDP did this to gain support).
o Small businesses in urban districts
7/11 and neighbor shops
Post war periodBusinesses had fewer than 30 employees.
LDP government taxes small businesses lightly and did not enforce taxes
Passed a law that made it impossible for larger retailers to relocate in the Urban
o Salaried workers in large corporations
Blue and white collared people
Few labor policies
Managed to retain distinct Japanese culture despite being very developed. They still sell distinct
Japanese goods instead of being dominated by large American brands like Wal-Mart etc
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