LDP LANDSLIDE COULD UNLEASH MAJOR PROBLEMS FOR JAPAN

The crushing victory of the Liberal Democratic Party of Japan in today's Lower House election will cause more problems than it solves.

With the electorate giving Prime Minister Sanae Takaichi a resounding mandate, there is now no excuse for the LDP not to implement its manifesto. In fact, failing to do so will be a major political problem.

The real problem here, however, is that the manifesto the party fought the election on is full of all types of traps and unexploded bombs that now look certain to be set off. 

The manifesto's ambitious economic promises, such as widespread tax reductions combined with increased support measures, like utility subsidies and child allowances, will strain Japan's fiscal resources and undermine confidence in government debt at a time when Japan is already overburdened with a mountain of debt. 

Fears of triggering an economic melt-down were also clearly pushed to one side with the manifesto plan to spend an extra $16 billion in agricultural subsidies, a measure that can only help farmers if food imports are made expensive through tariffs, which will of course just mean higher food prices in the shops for Japanese consumers.

Friction with China, caused by Takaichi's abrasive language, and promises to strengthen defence will also add to the vast national debt, the biggest in the world, which has only been managed due to rock-bottom interest rates that have sunk the yen to its lowest value in decades. 

Cutting tax while boosting government spending is certainly no way to attain a "responsible proactive fiscal policy" and reduce the government debt-to-GDP ratio. This is simply not going to happen. Expect instead a downgrading of the Japanese economy from rating agencies and a rough ride on the bond markets with Japanese yields forced to rise.

Manifesto pledges to push transparency in political fundraising through disclosure will soon get lost in the weeds as the influx of new LDP members seek to obfuscate the funding that helped them win.  

Meanwhile so-called economic security measures, like creating a Japanese version of the CFIUS (Committee on Foreign Investment in the United States) to screen foreign investments and ensure "secure" supply chains for critical minerals, looks set to deter foreign capital and disrupt supply chains, most of which rely on Chinese cooperation, or to simply be ignored on payment of suitable bribes to LDP lawmakers. Think of it more as a charter for domestic corruption.

Another $23 billion pledged to be spent on an "accelerated child-rearing plan," which includes free childbirth costs and babysitter subsidies, wage hikes in healthcare and childcare, and free high school tuition and school lunches, is unlikely to have much impact on the country's low birth rates, but will certainly add to the already strained budget.  

Another manifesto item, which is sure to be quietly and speedily dropped, are the strict immigration controls promised. Enforcing them could adversely affect the labour requirements of the business lobby that mainly funds the LDP.

This time the LDP managed to contain the "far right" Sanseito by messaging hard on immigration, but once they fail to deliver on this, expect to see the far right in Japan empowered and an increasingly toxic political environment on the right. 

In a nutshell, this electoral landslide now allows the LDP to either push through all their promises -- and destroy the economy! -- or openly betray them. This is far from the best outcome for the party. Now they will be unable to blame the other parties for preventing them doing what the voters have foolishly and naively endorsed.