Abe, Shinzo (LDP), Prime Minister
Mr. Abe is the current Prime Minister as well as leader of the Liberal Democratic Party (LDP), the largest party in the Lower House. He was born into a political family as grandson of a Prime Minister and son of a Foreign Minister. This is the second time Mr. Abe assumes the role of a Prime Minister. In September 2006, he succeeded Junichiro Koizumi as the LDP leader and a Prime Minister. However, under his leadership, LDP suffered a severe defeat in the Upper House elections in 2007 and he later stepped down from being Prime Minister citing health reasons. In September 2012, he returned to the leadership of LDP after narrowly defeating his opponent, Shigeru Ishiba. Mr. Abe led LDP into a landslide victory in the Lower House elections held on December 16, 2012 and subsequently became Prime Minister on December 26, 2012. As of September 2014, the success of his economic policies (Abenomics) has earned him high approval rate and significant political capital. His term as the LDP leader will end in September 2015, but he may win unopposed. If he does, the next hurdle for him to remain as Prime Minister will be the Lower House election scheduled to be held before December 2016.
His policies can be described as neo conservative and resemble that of Junichiro Koizumi in both economic and social aspects. One of the poster child policies of Mr. Abe in 2012 is to direct BoJ to raise its inflation target from 1% to 2% and to encourage the bank to take a more aggressive easing policy. In the social policy area, he argues against raising the minimum wage as it would raise the cost of small to medium sized corporations. He also argues to cut welfare subsidy by 10%. In the national security area, he is considered to be a military hawk. He argues to enable Japanese defense force to deploy overseas for fighting missions.
The financial market has welcomed Mr. Abe as a pro-growth Prime Minister. In our view, Mr. Abe indeed has a number of positive policy proposals. Bank of Japan has allowed deflation to persist for as long as 14 years since 1998 and we would argue that the excessive independence of the bank may have introduced a bias toward deflation. In this light, Mr. Abe’s call to hold BoJ accountable for its failure is a legitimate policy proposal. However, his other policy proposals, such as infrastructure buildup and a larger role for the government to choose future growth areas seem superficial and appear to be a return to pork barrel politics. His initial appointment of his cabinet ministers enhances such impression. We see no figures that can exert intellectual leadership in formulating cohesive and sustainable growth policy.
Aso, Taro (LDP), Finance Minister
Mr. Aso is the current Finance minister as well as the minister in charge of FSA, the regulatory agency for the financial industry. He also carries the title of Vice Prime Minister. Mr. Aso was the Prime Minister of Japan for a year between September 2008 and September 2009. Similar to Mr. Abe, he was born into a political family. His grandfather is Shigeru Yoshida, one of the most iconic Prime Ministers in the post WWII Japan. He is also a son-in-law of Prime Minister Zenko Suzuki.
Mr. Aso is known for his preference to stimulate the economy through active use of fiscal policy. Under his leadership, the cyclically adjusted fiscal deficit to GDP ratio deteriorated from 3.1% in 2008 to 6.9% in 2009, according to OECD estimate. The deterioration is equivalent to 18 trillion yen (190 billion USD in 2009). On monetary policy, Mr. Aso seems moderately critical of BoJ. He argues that the BoJ should be held accountable for letting deflation persist for this long. However, he does not seem as active as Mr. Abe in intervening in the monetary policy. While the Ministry of Finance is chiefly responsible for the administration of BoJ, it is possible that Mr. Aso may be inclined to leave the policy portfolio to his colleague Mr. Amari, the Minister for Economic Revitalization who heads the Council of Reconomic Revitalization, the likely primary vehicle for economic policy management in the Abe government.
Amari, Akira (LDP)
Mr. Amari is the Minister for Economic Revitalization. His post has a new name, but it is essentially the same as the one held by Mr. Maehara in the Noba cabinet. He will be in charge of planning economic and fiscal policies of the Abe government. He is in a vulnerable position. While as a Minister in charge of Economic Revitalization Mr. Amari can potentially exert leadership in the broad range of policies, each policy are also in the realm of various ministries. For example, Ministry of Finance considers the fiscal policy management, either long term or short term, belongs to itself and we do not see it giving up any inch of its authority, especially when the ministry has a powerful politician, Mr. Aso as its head. Ministry of Economy, Trade and Industry (METI) considers the industrial and competition policy to be its own turf. Unless Mr. Amari exerts a particularly strong leadership, he will likely become a mere coordinator, rather than a director, of economic policies.
Mr. Amari is a son of a parliamentarian, although his father was much less established than the fathers of Mr. Abe and Mr. Aso. Mr. Amari is considered to be knowledgeable in the area of public subsidy for businesses.
Ishiba, Shigeru (LDP)
Mr. Ishiba is the current Minister of Local Economy Revitalization, a new ministerial position created in September 2014. He emerged to the political center stage by coming close to winning the LDP leadership election in September 2012. While he lost against Mr. Abe, he received the position of Secretary General of the LDP, the most powerful position within the LDP overseeing campaign strategy. His political influence seems to be waning now, while his rival, Mr Abe successfully holds onto the prime ministership. In September 2014, Mr Abe succeeded in depriving the position of Secretary General of LDP from Mr Ishiba against his wish. Mr Ishiba's political fortune may rise again, once Mr Abe starts to lose his popularity.
Mr Ishiba's policies tend to be moderate on a broad range of issues. His economic policy seems somewhat liberal, arguing for both growth as well as fiscal reconstruction. He calls for lowering corporate tax below 30%. He calls for freer trade, but hedges himself by adding, only when it benefits the overall welfare of Japan. He does not seem to have a particularly strong view on the monetary policy. Unlike Mr. Abe, he does not have a nationalist tendency. He is against visits to the Yasukuni Shrine by Prime Minister. He is considered to be an expert on .Security, having served three times as a Defense Minister.
Ozawa, Ichiro (ex DPJ)
Mr. Ozawa belongs to one of the fringe political parties, 'People's Life' party. He led 49 parliamentary members to defect from DPJ in July 2012, mainly over the disagreement on consumption tax rate hike policy. However, his party lost heavily in the Lower house elections held on December 16, 2012. At the end of 2012, there are only 15 parliamentary members to his party. We may be seeing the last days of Mr. Ozawa.
Mr. Ozawa is probably one of the most known active Japanese politicians, often nicknamed as 'Shadow Shogun' in the foreign media. While often being one of the most powerful politicians in Japan, he has missed his chance in becoming Prime Minister, and it seems to us that he is unlikely to become one in future.
His policy views are complex, perhaps due to his constant campaign strategizing. He has been known to hold a liberal economic policy view and has argued to raise consumption tax rate to 10% in the past; but he is currently against freer trade, and he tends to advocate for a larger role for the government in social policy. He currently argues for no consumption tax rate hike and abolition of nuclear power plants in the next 10 years.
Hashimoto, Toru (JRP)
Mr. Hashimoto currently serves as Mayor of Osaka-City and he is effectively a co-head of the Japan Restoration Party, arguably the political party with the strongest momentum at the end of 2012.
He was a practicing lawyer and a TV celebrity before he became the Governor of Osaka prefecture in 2008 and then the Mayor of Osaka city in 2011.
His policies have tended to emphasize the regionalism within Japan, calling for delegation of power from the central government to local governments. While his stance on national policies is unclear at this point, his economic policy seems quite liberal, proposing deregulation and privatization of public sectors. He acknowledges unemployment as an inevitable feature of a market based society while arguing for a safety net mechanism.
Ishihara, Shintaro (JRP)
Mr. Ishihara is nominally the sole head of the Japan Restoration Party. In effect, he shares the leadership of the party with Toru Hashimoto. Mr. Ishihara resigned as the Governor of Tokyo metropolitan area in October 2012 in order to establish a new national political party. He initially formed his own party with a number of his friends, but he quickly merged his party with the Japan Restoration Party that had been led by Toru Hashimoto.
Mr. Ishihara has been famous for his nationalistic tendencies. Recently he caused a huge international controversy by trying to build a public facility on the Senkaku islands, known as the Diaoyu Islands in mainland China. The islands are controlled by Japan but both Mainland China and Taiwan argue for their territorial claims. The Japanese government stepped in and purchased the islands from private owners to stop Mr. Ishihara's plan, but the incident developed into a serious diplomatic conflict between Japan and China.
His economic policy is unclear. He has voiced his support on consumption tax rate hike in the past and he argues for maintaining nuclear technology.
Watanabe, Yoshimi (Your Party)
Mr. Watanabe is the leader of a small political party, Your Party. Mr. Watanabe was born into a political family, being a son of a Finance Minister. He has been a LDP parliamentary member between 1996 to 2009 before leaving the party to establish his party, Your Party.
He can be considered as a maverick populist. He is against consumption tax rate hike and argues for a drastic reduction in the number of parliamentarians. He is against nuclear power generation and he also argues for aggressive monetary easing to restore inflation in Japan.