Election Surprise: Abenomics and Central Bank Independence Trump Nationalism and Fukushima

Abstract

This chapter argues that economic questions remain at the heart of voters’ concerns. Voters clearly cited economic recovery (keiki taisaku) as the top priority they set for the government (Asahi, 17 December; 27 December; Yomiuri, December 23; Nikkei, 28 December 2012). All the polls clearly put economy and employment ahead of political stability or diplomacy. The great disappointment with the failure of the social-democratic experiment launched by the Democratic Party of Japan (DPJ) and its later transformation into fiscal consolidation has given Abe a chance to rebrand old-style Liberal Democratic Party (LDP) fiscal policies under the new label of “Abenomics”. Abe’s late campaign focus on the Bank of Japan (BOJ) as a key target gave him unusual traction and allowed him to embody the hope that he could take the economy into a new direction, one that would neither bring the social pain associated with Koizumi structural reforms nor the fiscal consolidation and internal divisions experienced under Noda. The DPJ had a great mandate and a great set of ideas, but was unable to deliver on either economic growth or social progress due to internal instability and lack of governing competence (on the importance of competence, see also Midford in this volume and Reed, Scheiner and Thies 2012). External shocks also weakened its ability to governance.