“Lost Decades,” 1989-2009

*"Iron Triangle," Political Dynamics, 1955-1993

LDP, bureaucracy, big business

Closed decision-making process

Politics of patronage

Corruption

Restraints on Iron Triangle

Socialists and labor movements

Civic movements

Media and public opinion

Bursting Economic Bubble

Overheated economy in late 1980s

Nikkei stock market index

13,000 in 1986

39,000 in 1989

14,000 in 1992

7,000 in 2009

29,000 in 2022

Spiraling real estate prices

Economic reversal of 1990s

Private sector

Stock market crash

Real estate price collapse

Bank crisis

Bad loans

Government’s ”disastrous macroeconomic policy decisions” (Gordon, pp. 331-336)

Finance Ministry raised interest rates, 1989-1991

Stimulus spending of 1995 offset by consumption tax increase in 1997

No bailout of banks until 1998

Financial Reconstruction Commission (FRC)

GDP Growth Rates (calculated based on World Bank)

1960s: 10.11%

1970s: 4.11%

1980s: 4.37%

1990s: 1.47%

Comparative GDP Growth Rates Per Decade (%), 1960-1999 (calculated based on World Bank )

LDP Weakness, 1989-2001

3 LDP Prime Ministers, 1989-93

Factors contribution to weakness

Post-bubble Recession of 1990s

Corruption scandals

Recruit scandal, 1989 (¥150 million)

P.M. Uno's affair with geisha, 1989

Sagawa Scandal 1993 (¥1 billion)

LDP break-away parties

Japan New Party

Japan Renewal Party

Anti-LDP coalitions, 1993-1994

Socialists and centrists

Socialist-LDP coalition, 1994-1996

Electoral reforms, 1994

300 single-member districts

Public funding of candidates

Socialists discredited

Prime Ministers

12 PMs, 1955-1989, 3.7 years av.

10 PMs, 1989-2000, 1.2 years av.

LDP recovery 2001-2009

*Koizumi Junichiro, 2001-2006

Non-factional politician

New image: Dynamic reformer

5 females appointed to cabinet

Reduced spending on patronage

Postal savings privatization

Public Works cut 30%

“Assertive” foreign policy

"Asian leadership"

Visits to Yasukuni Shrine

600 reconstruction troops in Iraq, 2003-2006

69% of public opposed (2005 poll)

LDP majorities in Diet, 2003-2009

Koizumi personality

No long-term impact on Japan’s politics

Opposition weakness

Modest economic recovery

2.49% GDP growth 2000-2007 (World Bank)

Banking recovery (FRC of 1998)

Low interest rates, 1999-2006

Exports to China

Japan's GDP Growth Rates (calculated based on World Bank)