The Japanese Constitution and Its Economic Policy Consequences

Conference on the Japanese ConstitutionPanel on the Constitution’s Influence on Japan’s Global Relations

The University of MichiganApril 15, 2011

Jun Saito, Ph DAssistant Professor

Department of Political ScienceYale University

Outline

1. Constitution and Economic Policy2. Japanese Constitution and Econ Policy3. LDP as an Endogenous Party4. Exchange Rate Regime and the LDP5. Political Instability and Bicameralism6. Conclusions

1. Constitution and Economic Policy

• Variation in constitutional design– Presidentialism vs. parliamentalism– Electoral institutions– Intergovernmental relations

• Outcomes– Structure of commitment and mechanism of

leadership selection– Party vs. individual– Programatic vs. clientelistic– Trade policy– Pork barrel

2. Japanese Constitution and Economic Policy

• Parliamentalism + Bicameralism– Policy change happens iff the incumbent party

wins three consecutive elections. – Otherwise, policy gridlock

• Unitarism – Large spending by local governments + small

revenue base– Soft budget constraint– Local politicians as campaigners

3. LDP as an Endogenous Party

• Early postwar Parliament– Instability and low legislative productivity– Frequent party switching– Over-nomination of candidates

• One big conservative party– Long-term dominance predicted– Institutional safeguard– LDP as a regime of “perverse accountability”

4050

60

50 60 70 80 90 00 10Election Year

LDP's Pred. LDP LDP + Coalition

LDP

Vot

e Sh

are

(%)

2040

6080

50 60 70 80 90 00 10Election Year

LDP's Pred. LDP LDP + Coalition Majority

Low

er H

ouse

Sea

t Sha

re (%

)

Votes

Seats

Theory of the LDP

• Perverse accountability– Voters’ expectation of the long-term grip of

power– Voters competed against each other and held

themselves accountable to the LDP• Outcome

– Machine politics, interest group politics– Delegation to the bureaucracy

Japanese Ballot

斉藤

淳

11

2040

6080

100

500 1,000 1,500 2,000 2,500 3,000Municipal Population in thousands

Max

imum

Ass

embl

y Si

ze

jiji NfNfNNf )(

Merging municipalities reduces overall no. of Municipal assembly members.

Municipal Assembly Size as a Concave Function of Municipal Population

020

4060

80

1 10 100 1,000Municipal Population in thousands

LDP (Actual) (Lowess) Komei (Actual) (Lowess)

1998 Upper House PR Vote Share

3602

33703282 3272 3256

1847

1,50

02,

000

2,50

03,

000

3,50

0N

umbe

r of M

unic

ipal

ities

Jan-1960 Jan-1970 Jan-1980 Jan-1990 Jan-2000 Mar-2006Year

13

No. Municipalities

4050

60

50 60 70 80 90 00 10Election Year

LDP's Pred. LDP LDP + Coalition

LDP

Vot

e Sh

are

(%)

2040

6080

50 60 70 80 90 00 10Election Year

LDP's Pred. LDP LDP + Coalition Majority

Low

er H

ouse

Sea

t Sha

re (%

)

Votes

Seats

4. Exchange Rate and the LDP

• Mundell-Fleming Model– Fixed exchange rate: fiscal expansion

effective– Floating exchange rate: monetary expansion

effective (fiscal ineffective unless accompanied by monetary expansion)

• Electoral implications– Fiscal – targeted spending– Monetary – not so

-30

36

55 60 70 80 90 00 09Year

All Observations Lower House Elections

Econ

omic

Gro

wth

Rat

e (%

)Business Cycles and Elections

1955 195819601963 19671969

1972 1976

197919801983

1986

1990

19931996

200020032005

2009100

150

200

300

360

55 60 70 80 90 00 09Year

All Obs HR Election

Exc

hang

e R

ate

($1=

JPY

, log

sca

le) Exchange Rate and Election

5. Political Instability and Bicameralism

• Lower House– SNTV (1947-1993)– SMD + PR (1996 - )

• Upper House– District + Nationwide

46

810

1214

1950 1960 1970 1980 1990 2000 2009Election Year

Lower House

Upper House

Mal

appo

rtion

men

t Ind

ex (%

)

Loosemore-Hanby Index weighted by # of seats

Upper House and Political Instability

• Upper House electoral loss and leadership change– Miki, Hashimoto, Abe

• Coalition politics– Preference outliers and Futenma Base

• Commitment to non-change

6. Conclusions

• Bicameralism and political instability– One-party dominance as functional needs– “Big coalition” with fragile leadership structure– Clientelism vs. stability

• Constitutional reform– Removal of Sangiin or introduction of fixed-

term executive (effectively presidential institution)