Japan Lower House election - Dec 14, 2014

[jaichind]

http://www.dailytimes.com.pk/foreign/13-Nov-2014/japan-s-abe-to-postpone-tax-hike-call-december-election

Looks like Abe will call an election on Dec 14th.

[jaichind]

If he calls it on December, 14th when would it actually be held?

Also, you beat me to the punch on creating a thread for this.

He will call it Monday after the GDP numbers come out.  The election date would be 12/14.  At this stage there are so many rumors he has to call it or he will seem like a chicken.

[jaichind]

Obviously there is something I don't know, because I would think now is not the best time for the LDP to be holding a snap election. What would that be?

Well, what Abe is trying to do is to get a replay of the Koizumi landslide midterm of 2005.  In 2005 anti-postal reform LDP rebels worked with DPJ to reject Koizumi's postal office reform plan.  Koizumi then called an election as an referendum on this reform and won in a landslide.  Abe seems to want to delay the consumption tax increase so he wants an election after monday's presumably bad GDP numbers come out saying Japan's economy cannot afford a tax increase and call an election.  Abe seems to infer that there opposition to the tax delay within the LDP.  Problem with this is that Abe should first call a vote in both houses and expose these LDP rebels, and if Abe cannot win that vote he can call an election to get a mandate for a tax delay.  He seems want to just bypass that and go straight to an election.  I do not think this will work and he will lose seats although not his majority.   

[jaichind]

Signs of opposition realignment to take on LDP-NKP.

2 opposition parties in Japan mull merger as election looms+
TOKYO, Nov. 15 Kyodo
The main opposition Democratic Party of Japan and Your Party, a small opposition group, are considering merging ahead of the snap election that Prime Minister Shinzo Abe is expected to call soon, party officials said Friday.
The two parties have also sounded out the Japan Innovation Party, another small opposition group, about joining the amalgamation, they said.
Abe is expected to announce Tuesday plans to soon dissolve the House of Representatives for a general election in December, according to senior Diet members of Abe's ruling Liberal Democratic Party. Abe is also expected to announce he has decided to postpone until April 2017 the second-stage increase in the consumption tax planned for next October.
The DPJ and Your Party are now coordinating their stances on that matter. The DPJ previously had called on the government to proceed to raise the sales tax next October to 10 percent as planned. But on Friday it made a major policy shift to seek to freeze the tax at the current 8 percent.
The DPJ holds 114 seats and Your Party 20 seats in the 722-seat Japanese parliament.
It is possible that talk of merging with the DPJ could lead to a split in Your Party by intensifying conflicts between current party leader Keiichiro Asao and former leader Yoshimi Watanabe.
More than five Your Party members are expected not to join the new party created through a merger with the DPJ, and to either follow Watanabe or explore the possibility of joining forces with the Party for Future Generations, another small opposition group.
DPJ leader Banri Kaieda and Asao held talks Friday on drafting a common platform and coordinating candidates to field for the upcoming election. After the meeting, however, Asao was noncommittal about whether the parties intend to merge, saying that is "just a rumor."

[jaichind]

If Abe wants to get a mandate to delay the consumption tax but now DPJ does now support delaying the consumption tax then what is the point of the election?  They should all vote to delay the tax and move on.  Of course the tax delay is just an excuse to try to lock in another large majority while Abe can still do it.

[jaichind]

Japan GDP figures coming out 6:50PM EST Sunday 11/16 which is about 2 hours from now.  The numbers are the Q3 annualized QoQ which is expected to be 2.2%.  The CW is that 2.2% is too low given the disastrous -7.1% of Q2 annualized QoQ numbers and that the recovery from the consumption tax increase is too slow.

[jaichind]

Numbers that came out are disastrous.  Instead of 2.2% annualized QoQ  it was -1.6%  annualized QoQ and -0.4% QoQ pushing Japan into an recession.  At this stage there seems to no alternative to delaying the consumption tax which in turn means that Abe will for sure call an election. 

[jaichind]

http://www.bbc.com/news/world-asia-30092633

Its on.

[jaichind]

I suppose Abe is running against the tax here?

Correct.  Although what is silly about this election is that there is no one taking the other side.  The DPJ also accepts that the tax increase should be delayed.  The main opposition to tax increase delay are some unnamed fiscal hawks in LDP.  So unless these LDP hawks are called out it will be an election where everyone agrees.  Of course the real agenda is to try to get a mandate before Abe has to make hard decisions which could be unpopular.   Like restarting the nuclear power plants (I was in Japan back in Aug 2014 and they have a real power issue) or an reinterpretation of the constitution to allow for the use of the Japanese military for collective defense.  Of course if Abe ran on these issues then there might be an significant reverse  for LDP.  This is why the election has to be officially about delaying the tax increases. 

[jaichind]

Abe is setting the bar pretty low. 

"Shinzo Abe says he would step down if the coalition of his Liberal Democratic Party and Komei party fails to keep its majority in an upcoming election."

Yeah.  If a PM lead a coalition into an election it is pretty standard that he or she will have to resign and also resign the leadership of the now former ruling party.  Abe should really set the bar higher.  Something like "If the LDP-NKP fail to capture a 2/3 majority like in 2012 then I will view that a rejection of my policies and I will step aside for another LDP PM."  I guess he is too chicken to take gamble like that even though the odds are pretty good that he has a reasonable shot at maintaining a 2/3 majority.  Remember, the DPJ says that it only currently has possible candidates in 134 out of the 295 FPTP seats while the JIP only has 75 possible candidates out of the 295 seats.  I am sure they will come up with something but they might end up being joke candidates.  The DPJ and JIP are caught by surprise by the turn of events and are not ready for an election.  By projecting a lack of confidence, Abe could galvanize the opposition into tactical alliances to stop him.   

[jaichind]

Your Party disbands due to conflict on relationship between YP and LDP.   pro-LDP former YP leader Watanabe will most likely form a new party that is aligned with LDP.  Current YP MPs most likely will either join DPJ JIP PFG or become independent. 

I actually think this might be bad news for LDP.  I always felt that YP was a enabler of LDP victory.  It attracts anti-LDP center-right voters who would have gone to DPJ otherwise.  The demise of the YP would mean that these voter will either not turn out or vote for DPJ or JIP. 

[jaichind]

Is a good graph why Abe needs an election now and not later.  Abeconomics did achieve greater inflation but for the average Joe it has been more harm than benefit. 

[jaichind]

I saw a link saying that Japanese companies were still hoarding cash even with higher inflation rates :/

Is Ozawa's outfit going to finally vanish, or will they put up a token effort?

The Japanese sector is very skeptical and risk averse given so many false starts at reform.  Hording cash reflects this concern is really an example of Ricardian equivalence as it will act to negate the stimulus efforts of Japanese officials.  These elections will be seen as another trick will make the Japanese private sector even more skeptical and risk averse.  They pretty much think at some time in the future it will be time to pay the piper with massive tax increase, mostly on capital to sort out this current fiscal and economic imbalance.  Why invest in capital when it will get taxed massively in the future.  So the solution is to horde cash.

As for PLP I think its time for Ozawa to merge it with DPJ and retire.  At some stage it is time to move on.  I doubt he will do so. 

[jaichind]

This is a self defeating-policy though, isn't it? By failing to invest the economy only stagnates further, expanding the imbalance and making it more likely that they government will levy confiscatory taxes to get to the money and spend it; I'm not sure what sort of policy there is to correct that beyond openly threatening to tax uninvested capital stock if individuals continue sitting on it. Some sort of wealth tax on assets held in savings accounts? Of course if the Japanese are as risk averse as they seem to be this could just backfire and they'd just put the money under their beds, so to speak.

All this heterodoxy makes me feel icky.

I thought about this problem as well.  One way, is like you say, threaten a wealth tax.  Krugman's solution is to threaten monetization of the public debt which in turn incentive economic actors to spend.  My preferred solution is some monetization of the debt plus a radical labor market reform which will lead to one off surge in unemployment but will lead the proper pricing of labor and cutting out the dead wood at the enterprise level.  Of course if heterodoxy  is the way out then I think Japan is not radical enough in the sense you should go all the way with heterodoxy.  One heterodox solution I can think of is instead doing QE version X, just give every adult resident in Japan a $8000 gift debit card which would expire in 3 month as opposed to $700 billion in EQ every year.  The cost is the same.  And if need so do the same thing next year as well.  I think that will be more effective than QE.  I do not like the solution but I actually think it is better than QE.  I still like my supply side solution as the orthodox way of doing things but I say, if you are going to try something heterodox go all the way.

[jaichind]

It is sad what happen to YP.  That is pretty much the only party in Japan I like.  The managed to survive the Abe wave of 2012 and come back from near irrelevance in 2013 to get a respectable vote share in the 2013 upper house election.   What really what did YP in was not an split over policy but an issue over long term vision of the party in terms of identity.  It seem that Watanabe always planned for YP to re-merge YP back in the LDP in the future as the Watanabe faction, where as other true free market reformers that joined YP felt that LDP is not capable of playing a role of a true economic center-right party.  As a result a split could not be avoided ending in the destruction of the party.  At this stage I see no reason why Watanabe should even bother forming a new party.  He should just re-join LDP.  I guess the reason he does not is because of various anti-Watanabe currents inside the LDP that are working against him.   Watanabe actually was fairly close to Abe back in 2006-7 when was still in the LDP.

[jaichind]

Even though the DPJ was completely caught by surprise by this election and most likely will not gain as much as they could have if they were better prepared,  they should see this election as good news.  This election will once again establish DPJ as the only viable alternative to LDP.  Other possible rivals in the opposition space have all imploded.  YP is mostly gone, JRP split into JIP which is lacking credibility due to the split of JRP and the PFG which despite its name is mostly seen as a party of old men and has-beens.  JCP gained strength but that will only highlight DPJ as the only mainstream alternative.  I have always stated that the way for DPJ to win is to lead an non-JCP opposition alliance and lure JCP voters fed up with LDP rule to vote tactically for DPJ in FPTP districts.  While that will not take place in 2014, DPJ did set itself up for a revival for the next election when the entire Abe experiment which is already losing some shine will dull and disappointment even more.  

[jaichind]

Latest Kyodo poll says 63% don’t understand reasons for Japanese Prime Minister Shinzo Abe’s call to dissolve parliament with 31% of respondents said they understood the reasons.  A majority of respondents, or 51.4%, said they want to see a more balanced political landscape between the ruling and opposition parties.

In PR vote Kyodo found support to be

LDP        25.3%
DPJ          9.4%
NKP         4.6%
JCP          4.2%
JIP           3.1%
SDP         0.9%
PLP          0.3%
PNG         0.1%
Last time around Kyodo was pretty accurate in terms of the relative gaps between parties. Back in 2013 a Kyodo poll for PR vote

LDP            30.6%
DPJ              7.4%
NKP             7.0%
JRP              4.9%
YP                3.3%
JCP               3.8%

and it ended up being

LDP            34.7%
DPJ             13.4%
NKP            14.2%
JRP             11.9%
YP                8.9%
JCP               9.7%  

If so, based on this poll we can expected LDP to get around 30% and NKP 12% in the PR vote which would actually be a positive swing from 2012 when LDP-NKP got around 40%.  But in the 300 FPTP district seats it seems that the anti-LDP vote, unlike in 2012 and 2013, will concentrate more around DPJ leading to loss of seats for LDP-NKP there.  How many depends on quality of DPJ candidates and ability for DPJ to coordinate with JIP and SDP/PLP.  Another factor will be if JIP really goes after NKP in Kinki region.  Back in 2012 JRP and NKP actually had a tactical alliance in the FTTP of Kinki where NKP is also fairly strong.  This time around JIP might go after NKP hurting NKP in the Kinki region.

[jaichind]

As for PFG, for me it is just a current version of Sunrise Party (SP) which managed 2% in the PR vote for the 2010 upper house elections.  I expect it to do about the same time time around.  At this stage running in FPTP seats, the PFG will merely hurt LDP by taking some of the nationalist vote away from LDP.

[jaichind]

It has been announced. The election will take place Sunday 12/14.  I will be on a business trip the week before to London but should be back in time to watch the results as they come in.  I hate to have to stuck in the plane while the results come out but we will see.

[jaichind]

2 YP MPs join DPJ.  I expect more to follow soon.  From a game theory point of view it makes sense for most of the YP MP to join DPJ.  LDP wont take them over their own candidate, PFG has poor prospects for them to run to win reelection, JIP is a choice but their support has dropped so it depends on where the YP MPs are located.  I suspect YP MPs in Kinki will go with JIP but there is the problem that JIP will mostly have candidates ready already and not be able to accommodate these new defectors.  So when it is all said and done, DPJ is the only game in town that has a high enough level of support in enough places to give these YP MPs a fighting chance.

[jaichind]

Looks like Makiko Tanaka will not run even though the DPJ chapter of Niigata picked her as the DPJ candidate.  This is the end of an era of the great Tanaka political dynasty in Niigata.  I always had great respect for Makiko Tanaka and her father and former PM Kakuei Tanaka.  

On the flip side, another daughter of a former LDP PM Yuko Obuchi daughter of former PM Keizō Obuchi will run.  She was made the Trade Minister recently in the Abe cabinet as part of his womenconomics offensive.  She had to step down a few days alter due to allegations her support groups misused political funds.  Based on what I know about Japanese political culture, these allegations will have zero impact on her ability to get reelected.  

[jaichind]

I hope NHK will provide results in English like they did in 2012. Too bad they took down the page like a day after election day.

I have the advantage of knowing Kanji because it is pretty much just Chinese.  So any Japanese results website I can understand 80% it and then I can figure out the rest.  These English website for NHK will have results but it will be delayed relative to the Japanese language one and have much less rich data (like were the outstanding results are and regional distribution) which will be very useful to project what the final results will be.  It would be like giving you vote count in a US election without telling you which counties report and how much.

[jaichind]

I hope NHK will provide results in English like they did in 2012. Too bad they took down the page like a day after election day.

I have the advantage of knowing Kanji because it is pretty much just Chinese.  So any Japanese results website I can understand 80% it and then I can figure out the rest.  These English website for NHK will have results but it will be delayed relative to the Japanese language one and have much less rich data (like were the outstanding results are and regional distribution) which will be very useful to project what the final results will be.  It would be like giving you vote count in a US election without telling you which counties report and how much.

Alright. So I guess we'll be on the Asahi Shimbun? Or do you have another favorite?

I always go with NHK during the count.  As the count is over I think sites like Asahi Shimbun will have richer data but they tend to be not as good as NHK during the count.  I am not aware that Asahi Shimbun has an English results site.  I guess I never looked since I just jump to the Japanese language site.  Actually reading Japanese election sites made me learn more about the history of the Chinese language.  The way the Japanese use certain Chinese characters in terms of meaning has diverged over the last 1300 years when Kanji was introduced to Japan from the Chinese Tang dynasty.  There are many Chinese characters whose meaning has changed over time and some I know for a fact had a certain meaning several hundreds of years ago but has since changed fairly recently.  I noticed that in many cases the Japanese also uses said character with the new meaning as well.  This means the Chinese must have re-imported the Japanese use in the last 100 years.  I think the level of Chinese re-importation of Japanese uses of Kanji in the last 100 years is quite underestimated.      

[jaichind]

I have been thinking about what should the DPJ election strategy be to maximize the LDP-NKP loss.  I think it should be

1) Make sure DPJ locks down New Party Daichi in Hokkaido.  Hokkaido used to be a DPJ stronghold but the breakup of the DPJ alliance with NPD doomed it to a massive defeat in 2012.  YP had some strength in Hokkaido so its breakup gives DPJ chances to absorb that vote.   
2) Lock up an alliance if not outright merger with PLP.  The PLP vote base is the same as DPJ so a merger will prevent a split of the vote.
3) Focus and dump resources in Tokyo.  Tokyo was won by LDP-NKP by narrow margins in many districts in 2012 and a less splintered opposition should help DPJ.  Tokyo is very elastic and often votes for the latest political fad.  JRP got a lot of votes in 2012 as the new political fad but now that is faded.  DPJ has to work to capture that vote. 
4) Form tactical alliances with JIP in Kinki region to prevent a JIP alliance with NKP like in 2012. Offer to support JIP in most districts in Kinki in return for JIP support in places like Hokkaido and JIP taking a junior role in Tokyo.
5) Form tactical alliances with SDP to prevent split of the vote.
6) Present DPJ as the alternative to LDP-NKP to attract JCP tactical voting in the district vote.

I think if the DPJ can do these 6 things well, I can see LDP-NKP gaining 2-3 seats in the PR section but lose 30+ seats in the FPTP which would put the DPJ in a good position for the next general election and do some damage to the Abe brand.

[jaichind]

BTW, this election there will be 295 FPTP seats and 180 PR seats as opposed to 300 FPTP seats and 180 PR seats.  The reduction of 5 FPTP seats is the first step in redistricting as to gave equal votes across Japan in terms of the population of east constituency.  All 5 reductions are from prefectures that are dominated by LDP except for Yamanashi prefecture where the DPJ does have some presence as has 1 of the 3 seats currently in that prefecture.  So now 3 incumbents of which 1 is from DPJ will have to fight it out.  Net net this change means most likely a net loss to LDP of 4-5 seats just from the start.