Koizumi Calls Snap Elections

[shoop]

So the LDP lost the vote on postal reform in the upper house and Koizumi has dissolved parliament.

The 22 members of the LDP who voted against the bill won't be allowed to run for the party again.

If the Japanese people are serious about reform they will give the LDP-New Komeito coalition a renewed mandate.

http://www.cnn.com/2005/BUSINESS/08/08/jap...loss/index.html

Anybody else out there interested in Japanese politics? bueller?

[Toro]

I like Koizumi. I really think he wants to reform Japan. And Japan needs a lot of it.

[shoop]

Absolutely and this postal reform plan is a great first step in the process.

Too many old buggers with vested interest fighting him in the LDP. If he wins this election reforms will go through easily. If not, look for an almost immediate return to recession for Japn.

[Riverwind]

If the Japanese people are serious about reform they will give the LDP-New Komeito coalition a renewed mandate.

The problem is this so-called reform is the post office provides good value to many Japanese - the Japanese Post Office is the biggest retail banking/insurance operation in the world because it provides good service - not because of a government monopoly. As a result, there is a perception among the Japanese that there is no need to fix something that is not broken.

There are legimate arguments to be made that the Post Office enjoys regulatory advantages that put private banks at a disadvantage, however, these regulatory oversightes could have been corrected without a wholesale privatization that will likely end up with smaller/remote communities paying much more for basic postal service - if any is available at all.

[BHS]

Is it just me, or do Koizumi, Pierre Pettigrew, and Joe Wilson (but not so much) all have the same hair stylist?

I must confess, I don't know anything about Japanese domestic politics. But keep posting, it sounds interesting.

[Toro]

That's funny BHS.

The problem with the post office over in Japan is that much of the funds are used to fund infrastructure projects that are not needed in Japan. The politicians direct funds to projects in their prefects, which pay off the construction companies who have given the politicians money. The construction industry is far, far more powerful than it is in North America and Europe.

Its a particular problem because in Japan, there is too much investment, especially investment that does not give a return. This investment is funded with debt, and now Japan is one of the most indebted nations in the world, the highest in the OECD with debt around 150% of GDP, more than double Canada or the US. Because of all this, Japan has been in deflation for 15 years and recession for most of that. And Japan is getting older and needs growth if it is going to fund the future retirees' pension obligations. By privatizing, the government believes the post office will no longer fund such projects. Japan is a mess.

[shoop]

Kudos to Toro.

The additional problem with money spent from the post office is that the money spent from its annual profits is off-book money. So this money is not subject to parliamentary review as it is not considered general revenue.

I think sparhawks point is a little weak.

Smaller remote communites won't pay more for their services. They will just be forced to drive further or accept a lower level of service within their community. I think you will see smaller communites see the size of their post offices shrink and become like the postal outlets you see in Canada today. Would any Canadian argue still argue that these moves were for the worse? Oh no, I have a super mailbox instead of home delivery I also wonder how much money will be saved when they do away with Saturday mail delivery.

Money losing post offices in small centres will be closed. Without the profits of the banking and insurances wings of the current postal system to subsidize these unnecessarily huge, unprofitable branches they will be forced to close and the citizens of the major metropolitan areas can reduce the subsidies they are sending to the countryside (inaka) a little.

Japan is in need of massive amounts of structural reforms. Reform in the private sector banks was a good first step. Letting the zombie company's go bankrupt, like discount retailer Daiei was a good second step. Postal privatization is a good, and desperately needed, third step.

Japan's huge debtload is a big ticking time bomb. The biggest thing that has prevented that bomb from going off to date is the TONS of cash in the postal savings system. If it is privatized it will be the largest private bank in the world.

This election will be an interesting one. The Japanese public care very little about the postal privatization issue. Koizumi won't allow the LDP councillors who voted agaiinst the bill, guaranteeing it's defeat, to run again for the party in these upcoming elections. I've read that these candidates running as independents could split the LDP/New Komeito vote and allow Minshuto (Democratic Party) to form a government.

My take. Koizumi's personal popularity will win out and his coalition will gain a new majorityin the upper house in the fall.

[Riverwind]

The problem with the post office over in Japan is that much of the funds are used to fund infrastructure projects that are not needed in Japan.  The politicians direct funds to projects in their prefects, which pay off the construction companies who have given the politicians money.  The construction industry is far, far more powerful than it is in North America and Europe.

I was not aware that the postal savings were being used as a massive slush fund for politicians - but I guess that makes sense they have to do something with the money - why not buy government bonds? If that is the case then I wish Koizumi the best with his reforms.

In terms of privatization of postal services: I agree that I get better service today from Canada Post because I can go to almost 7-11 during 'retail hours' instead of 'bankers hours'. However, my understanding is that Canada Post is still given subsidies to ensure that local service in remote communities exist and Koizumi has not included any such subsidy in the privitization plans.

[shoop]

I was not aware that the postal savings were being used as a massive slush fund for politicians - but I guess that makes sense they have to do something with the money - why not buy government bonds? If that is the case then I wish Koizumi the best with his reforms.

<{POST_SNAPBACK}>

Here is a great book on the Japanese political system, it's called The Enigma of Japanese Power.

http://shorterlink.com/?P8S4DZ

It is a little dated (1990) but still amazingly accurate. Deals with the postal system as well as a myriad of other issues.