Three and a half years ago, Japanese voters delivered what appeared to be a knockout blow to the Liberal Democratic Party (LDP), which had ruled Japan almost without interruption since 1955. The LDP, which was not so much a party as a political institution, presided over Japan's astonishing rise from a nation rebuilding from the rubble of World War II to a global colossus -- and then over a 20-year period of economic stagnation. In the interim, other East Asian countries caught up with Japan in terms of economic, political and military might.
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To replace the LDP and dismantle the rotten edifice it had built, Japanese voters in 2009 gave a mandate to the Democratic Party of Japan (DPJ) -- a dispassionate alliance of LDP defectors, market liberals, and socialists. It was supposed to not only be a political changing of the guard but a revolution: The DPJ would become the country's new ruling class, leading Japan back to economic growth and regional preeminence.
What a difference a few years makes. On Sunday, Japan will hold its first general election since that would-be revolution -- and the party projected to emerge in the driver's seat is the much-maligned and still much-loathed LDP.
For cynics and skeptics, this projection is a cause for glee. Japan cannot and will not change, they argued in 2009, and the LDP's resurgence proves it. They say the country is destined to be a wealthy but declining dowager, reliving memories of its past glories while demographics, bad governance, and the rise of new powers erode its global significance.
So why should we care about who is who in Japan today -- or which parties will win big on Dec. 16? Here are the top five reasons the Japanese elections matter.
1. Japan's economy could get a lot worse
Japan has suffered two decades of subpar economic growth. The fundamentals of its economy are dismal: It is locked in a seemingly unbreakable deflation spiral, its workforce is in decline, immigration levels are too low, and the combination of a global economic slowdown and a strong yen are decreasing the volume of its exports.
The recipe for growth of LDP president Abe Shinzo, who will be prime minister if his party wins, is to increase the monetary supply until the country achieves an inflation rate of 2 percent. Liberal economists have praised the plan, even though it dodges a discussion of what happens to Japan's government bonds in the face of inflation. Servicing Japan's astronomical nominal debt already consumes 25 percent of the national budget. An inflation-triggered rise in interest rates could lead to disaster as the likely liquidation of international investments and the devaluation of the yen sends new waves of turmoil through the weak world economy.
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