Money Politics in Japan: New Rules, Old Practices 9781626373952

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MONEY POLITICS IN

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MONEY POLITICS IN

JAPAN New Rules, Old Practices

Matthew Carlson

b o u l d e r l o n d o n

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Published in the United States of America in 2007 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 2007 by Lynne Rienner Publishers, Inc. All rights reserved Library of Congress Cataloging-in-Publication Data Carlson, Matthew, 1972– Money politics in Japan : new rules, old practices/Matthew Carlson. Includes bibliographical references and index. ISBN-13: 978-1-58826-500-5 (hardcover: alk. paper) 1. Campaign funds—Japan. 2. Campaign funds—Law and legislation—Japan. 3. Pressure groups—Japan. 4. Elections—Japan. 5. Japan—Politics and government—1989– I. Title. JQ1692.C37 2007 324.7'80952—dc22 2006029146 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. Printed and bound in the United States of America The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992. 5

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Contents

List of Tables and Figures Acknowledgments

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1 Introduction: New Rules, Old Practices

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2 Money and Candidate Quality

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3 Adapting to the Mixed System

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4 Spending and Vote Shares

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5 Party Strategies and Money Politics

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6 The Evolution of Support Groups

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7 The Creation and Costs of Informal Norms

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8 Conclusion

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Appendixes: 1 Political Finance Regulations in Japan 2 Lower House Election Results, 1986–2005 3 Prime Ministers of Japan, 1945–2006 4 Coalition Governments in Japan, 1993–2006

147 155 159 161

References Index About the Book

163 169 175

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Tables and Figures

Tables

1.1 2.1 2.2 2.3 2.4 2.5 3.1 3.2 3.3 3.4 4.1 4.2 4.3 5.1 5.2 5.3 5.4 6.1 6.2 6.3 6.4 6.5 6.6 7.1

Comparison of Japan’s SNTV and Mixed System Average Income Collected by LDP Members Average Income Collected by DPJ Members Politicians with the Largest War Chests in 2003 Regressions of Quality on All Members’ Income Regressions of Quality on New-Candidate Income Percentage of Funds from Contributions, Fund-Raising, and Party Sources of Income for KΩno TarΩ Sources of Income for Matsumoto Jun How Chatani and Wakamatsu Raised Funds in 1996 Percentage of District Vote Share (LDP and DPJ) Expenditures for LDP and DPJ Members Regressions of Money on Vote Shares in 2003 Number of Winning Candidacy Types for LDP Number of Winning Candidacy Types for DPJ Average Total Income by Candidacy Type Regression of Candidate Types on Yearly Income Average Number of Support Groups for LDP Members, 1986–2003 Politicians with Largest KΩenkai Expenses in Japan Regressions of Characteristics on LDP KΩenkai Expenses Types of Expenditures for LDP Members by Candidacy Type Average Number of KΩenkai for DPJ in 2000 and 2003 Types of Expenditures for DPJ by Candidacy Type Total Spending and Change in Spending for LDP Members

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11 25 27 28 33 35 45 48 53 55 64 65 69 85 87 88 89 98 100 102 104 105 105 117

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Tables and Figures

Figures

2.1 3.1 3.2 4.1 4.2 7.1 7.2 7.3

Income by Number of Previous Terms in 2000 (LDP and DPJ) Percentage of Income Collected by New LDP Candidates Percentage of Income Collected by LDP Incumbents Types of Expenses by Previous Number of Terms for LDP in 2003 Types of Expenses by Previous Number of Terms for DPJ in 2003 Average Costs for LDP Cohorts, 1996–2003 Ioku and Watanabe’s Total Expenses Hanashi and Nakayama’s Total Expenditures

29 43 44 67 68 116 122 125

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Acknowledgments

THIS BOOK WOULD HAVE BEEN impossible without the significant support and contributions of many people. My first thanks are to my parents for instilling in me a passion for learning and travel. Their lives are the stars in the constellation that guide me. I would also like to express my gratitude to the teachers who challenged me to do my best and to think for myself. I owe an enormous debt to Josephine Andrews, Robert Jackman, Gabriella Montinola, and Steven Vogel, who helped me hone my ideas, encouraged by fieldwork in Japan, and supported this work without fail. Special thanks also go to Robert Pekkanen and Ethan Scheiner; their comments and suggestions strengthened this work considerably. I gratefully acknowledge the scholarship provided to me by the Japanese Ministry of Education, which made it possible to study at the Graduate School of Law and Politics at the University of Tokyo for two years. I would like to express my sincere appreciation to Kabashima Ikuo for his wise and kind supervision and use of research materials created by his seminar students. I am also grateful to Takano Yasuko for arranging several key interviews, Sugawara Taku for providing useful information, and Steven Reed for sharing election data. Additional thanks go to Hasegawa Hiroshi and Yaeko for providing a home away from home for as long as I have been traveling to Japan. I would like to thank the countless politicians and staff members in Japan who contributed to my knowledge of Japanese politics. The Liberal Democratic Party’s (LDP) main chapter in Kanagawa prefecture graciously allowed me to attend political events and fund-raising parties without charge. Likewise, KΩno TarΩ permitted me to work as an intern in his Tokyo office. I also acknowledge the help of many LDP politicians and staff members, including the offices of Yatsu Yoshio, Suzuki Tsuneo, Mori Eisuke, Kosugi Takashi, and ItΩ ShintarΩ. In addition, I wish to thank numerous members in the Democratic Party of Japan, including Hata Tsutomu,

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Acknowledgments

Hatoyama Yukio, Tanaka Keishü, ·shima Atsushi, SatΩ KenichirΩ, Igarashi Fumihiko, and Sakaue Naoko. I was also fortunate to be able to work on the manuscript in Norway and Vermont. At the Norwegian University of Science and Technology, I thank Ola Listhaug, the Japan Program, and my colleagues in the Department of Sociology and Political Science for supporting my stay and making me feel welcome. At the University of Vermont I was provided with institutional support from the Asian Studies Program and the Department of Political Science. I thank Eileen Burgin, George Moyser, Peter Seybolt, Kazuko Suzuki, and Amani Whitfield for their generous suggestions and encouragement. At Lynne Rienner Publishers, thanks to Marilyn Grobschmidt and Steve Barr for shepherding the book through the publication process. Finally, I wish to thank my current and previous students for making my life colorful. May they travel and see the world.

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1 Introduction: New Rules, Old Practices

IN 1994, THE JAPANESE DIET (parliament) introduced political reforms

that are arguably the most significant and far-reaching since those implemented during the US occupation more than half a century ago. The Diet changed the electoral system for its Lower House (House of Representatives), rewrote the regulations governing campaign finance, and implemented a public-subsidy system for political parties. Party leaders implemented these sweeping changes after the long-ruling Liberal Democratic Party (LDP) lost power in the 1993 election following a series of corruption scandals that culminated in the discovery of cash, bonds, and gold bars in the homes and offices of its vice-president.1 Through the creation of new rules, political reformers hoped to remedy many of the ills associated with Japanese politics, including corruption and high election costs, candidate-centered election campaigns, and one-party dominance. For decades prior to the 1994 reforms, many had expressed displeasure with the single nontransferable vote (SNTV) system used since 1947 to elect members to the Lower House.2 Commentators and scholars blamed the SNTV system for a host of troubles, including money politics, corruption, factionalism, and candidate-centered instead of party-centered election campaigns (Curtis 1999, 142). At the same time, the campaign finance regulations were full of loopholes and lacked transparency. Political reformers and scholars hoped the adoption of a mixed-member electoral system and other changes would fundamentally improve the political system. 3 However, the system today is still affected by the continuation of past practices by parties and politicians, which have pushed Japanese politics in a direction that the reform architects had not intended or expected. I examine the consequences of the 1994 reforms by focusing on the efforts of politicians and parties to adapt and survive in the new system, looking specifically at the abilities of politicians to raise and spend money and to rely on preexisting practices such as the kΩenkai, a support organiza1

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tion created by individual politicians to organize large numbers of the general electorate on their behalf (Curtis 1971, 128). I also spotlight the strengths and strategies devised by the LDP to maintain a dominant position in the party system.4 By focusing on the interaction between the new rules and old practices in Japan’s political system, the impacts of the 1994 reforms on politicians and political parties are detailed. I find that the ability of politicians and parties to maintain and adapt old practices to new purposes has allowed incumbents, as well as the LDP as a party, to survive and prosper in the new system. Although the 1994 reforms may be the most far-reaching changes since the occupation, the political consequences of the new system revealed in this book suggest caution for other countries that have adopted, or are considering, similar reforms. Japan’s experience suggests that the strategic responses of politicians and parties to the new rules are not easily determined beforehand; these responses complicate the political consequences of a new electoral system. The Importance of Institutions

In 1992, investigators uncovered an illegal political donation of over $4 million from a Tokyo delivery firm given to LDP vice-president Kanemaru Shin.* Kanemaru paid a small fine, returned home to play mahjong, and for weeks declined to answer questions about what he had done with the illegal money (Economist 1993). Investigators delivered the final blow to his career six months later when they accused him and an aide of tax evasion. When the investigators raided Kanemaru’s homes and offices, they recovered cash, bonds, and 220 pounds of gold bars worth approximately $48 million (Schlesinger 1999). This scandal contributed to the passage of the 1994 legislation by creating a strong public perception that political reform was necessary. Despite the importance of money and the seemingly endless cycles of political corruption in Japanese politics, scholars have conducted few empirical studies to systematically investigate the use of money by Japanese politicians following the 1994 reforms. This is unfortunate because the reforms were supposed to address the “money politics” problem with its vicious cycle of campaign finance scandals.5 The change in the rules affords an excellent opportunity to consider the challenges of political reform and the issue of money politics in Japan. The quality of Japan’s democracy hinges on the effects of the rules as well as the actions of politicians and parties.

*Throughout this book, I write Japanese personal names following Japanese convention: family name followed by given name.

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According to the institutional approach in comparative politics, the effects of institutional rules can significantly shape the political behavior and strategies of political actors (Grofman 1989; North 1995).6 In particular, the choice of electoral rules has been shown to affect party systems in various ways, such as influencing the number of political parties that emerge,7 determining how parties and candidates place themselves on an ideological spectrum,8 and influencing the extent to which politicians find it necessary to cultivate a personal vote.9 The efforts of politicians to cultivate a personal vote or to place themselves on an ideological spectrum are based on a common thread in the literature on legislative behavior: politicians are motivated by their desire to seek reelection (Rae 1971; Mayhew 1974; Schlesinger 1985; Cox 1997). The efforts of politicians and parties are influenced not only by the choice of electoral rules, but also by past practices and history. Japan’s postreform system is shaped by the influence of organizational legacies and persistent informal practices from the past. In the case of political parties, their initial organizational circumstances shape their efforts to stay in power (Panebianco 1988; Scarrow 1996). Organizational legacies often encourage parties to maintain old practices rather than reform their organizational structures and routines; they also limit parties’ choices when the parties do reform (Scarrow 1996, 23). Therefore I concentrate on the ability of politicians and parties to apply familiar and preexisting practices to new purposes in the reformed system (Krauss and Pekkanen 2004, 28). Through the use of institutional theory, I seek to explain the development and consequences of institutions upon organizations in Japanese politics. Institutions consist of both formal and informal rules. I examine the formal rules, that is, the specific laws that govern the use of Japan’s mixedmember system.10 Informal rules refer to norms, conventions, and selfenforced codes of conduct (North 1995, 15). In particular, I analyze the informal institution called “Costa Rica” arrangements, in which one politician agrees to compete as a single-member district representative and the other as a proportional representative; both consent to alternate positions every other election. Organizations consist of groups of individuals who share similar beliefs or objectives. In this book I examine the LDP and the Democratic Party of Japan (DPJ), the main opposition party since 1998.11 Many scholars identify Japan as an “uncommon democracy” because of the longevity of the LDP, which has played a central role in Japanese politics since its creation in 1955 (Pempel 1990). Scholars have characterized the dominant form of LDP party organization in terms of its factional groupings, corruption-prone nature, and the lack of meaningful party organization at the local level (Thayer 1969; Curtis 1988; Foster 1982). In the early 1990s many politicians left the LDP to create new political

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parties. In 1994, many of the new parties coalesced into the New Frontier Party (NFP). The NFP disbanded in 1998, two years after failing to oust the LDP in the 1996 Lower House election. Many of the NFP politicians joined or created other political parties. Amid the changing political party landscape, the DPJ became the major opposition party after 1998 with the goal of defeating the LDP and realizing a change in government. 12 I focus explicitly on the rivalry and survival tactics of the LDP and DPJ. To understand the impact of the 1994 reforms on Japanese politics, it is necessary to examine the incentives faced by differently situated politicians and parties. I concentrate on the choices that politicians make within specific party organizations because “individuals from different backgrounds will interpret the same evidence differently; they may, in consequence, make different choices” (North 1995, 17). In particular, I am interested in how the specific rules of the mixed electoral system shape the campaign strategies and uses of money for incumbents and new candidates in each party. My argument highlights an important theoretical distinction between incumbents and new candidates. In Japan’s mixed electoral system, incumbents are likely to hold a considerable fund-raising advantage over new candidates because they can rely on their name recognition and extensive national and local connections. Because new candidates are likely to lack these advantages, they are expected to adopt different election and fundraising strategies. If the legacy of past practices is strong in Japan, the expectation is that the impact of the new rules will demonstrate weaker effects on the campaign strategies and uses of money by incumbents in comparison to new candidates. To understand how incumbents and new candidates currently fare in Japan’s mixed electoral system, it is essential to discuss the features of the pre-reform system and the reasons it was disliked by many politicians, party leaders, and scholars. Politics in the SNTV System

The SNTV system that was the norm in postwar Japan was adopted in 1925 and used from 1947 to 1993. The system was relatively simple in that voters were allowed to cast a single vote for a candidate in a multimember district; each multimember district typically returned three to five members to the Lower House. These votes could not be transferred to a party or to another candidate.13 Larger parties like the LDP had little recourse but to nominate more than one candidate in each district if they intended to capture a majority of seats in the Lower House. Thus LDP members typically faced intraparty competition from other LDP members as well as interparty competition from other parties’ candidates. It made sense for politicians from the same

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party to focus their campaign efforts on voters who supported the party instead of voters who did not; this led to extreme intraparty battles among LDP candidates (Curtis 1999, 142). With many politicians facing both intraparty and interparty competition, they devised candidate-centered campaign strategies, such as the use of personal support organizations called kΩenkai. Politicians offered a variety of constituency services to the members of their kΩenkai; these supporters typically returned the favor at election time by providing a stable base of votes. Politicians incurred high financial costs to operate and maintain their kΩenkai, which contributed to a system where nearly four times more money per capita was spent on politics than in Germany, the United States, or the United Kingdom (Johnson 1996, 215; Mizuguchi 1993). With scant emphasis on policy and issue debates in election campaigns, politicians maintained kΩenkai by spending exorbitant amounts of time and money holding regular meetings with supporters, attending funerals and weddings, and organizing karaoke parties, golf tournaments, and bus trips to hot spring resorts. Party leaders were also dissatisfied with the SNTV system. The LDP became so skilled at using personal votes to win elections that it could not change to a policy-based strategy (Reed 1994, 281).14 Steven Reed notes that the system was prone to a vicious cycle of campaign finance scandals followed by even greater campaign spending. Party leaders were unable to change the candidate-centered nature of the LDP or reduce the scandals that often damaged the collective reputation of the party. Because LDP politicians required considerable funds and support to compete in the multimember districts, many politicians and scholars link the SNTV system with corruption (Ozawa 1994; Yamaguchi 1993; Woodall 1996).15 In the late 1980s, investigators revealed that senior LDP politicians received stocks from a company called Recruit Cosmos before the company went public. The kingmaker and prime minister at the time, Takeshita Noburu, even appointed an electoral advisory council to consider the issue of electoral reform, but resigned after his involvement in the same scandal was exposed. Later in 1992 investigators discovered that senior LDP members—including Kanemaru Shin—accepted illegal money from a Tokyo delivery firm in a separate scandal. The SNTV system was further disliked because of the belief that it encouraged factionalism (Park 2001; Cox, Rosenbluth, and Thies 1999; Cox, Rosenbluth, and Thies 2000). Factions in Japanese politics are primarily but not exclusively associated with the LDP. A significant number of LDP politicians are associated with a faction typically headed by a senior party boss. Factions provide their members with campaign funds at election time and with important party and government positions. In exchange, members assist their leaders’ efforts to acquire a leadership position in the

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party and government. Factions were thereby criticized for contributing to the “money politics” issue and for dominating the selection of the prime minister. For these reasons, the SNTV system was blamed for such shortcomings of Japanese politics as money politics, corruption, factionalism, and candidate-centered election campaigns.16 The SNTV system was abolished in 1993, but not without a series of twists and turns in national politics. Politicians in Japan have debated electoral reform numerous times since the formation of the LDP in 1955, but have proceeded only as far as draft legislation on three occasions (Reed and Thies 2001a). What prompted party leaders to change the electoral and campaign finance systems, especially when the previous rules had served many of them so well? The pathologies of the SNTV system helped justify why reform was necessary, but the triggering factors that ushered in the political reform legislation were the product of specific political events and opportunities that became available to party leaders. The passage of the 1994 reforms emerged only after a series of maneuverings by party leaders. Faced with increasing pressure from the media and public for political reform, the LDP-led government under Miyazawa Kiichi proposed a pure single-member district system in 1993. Few in the opposition parties supported this plan. Within the LDP, a factional struggle for the reigns of power was fermenting after the vice-president of the LDP, Kanemaru (and leader of the powerful Takeshita faction), was forced into early retirement after investigators uncovered his hoard of wealth. When the Takeshita faction split into two main groups, the leaders of the smaller group—Ozawa IchirΩ and Hata Tsutomu—faced bleak prospects for asserting a major leadership role in the LDP. It is under these circumstances that the idea to create a reformist party as an alternative to LDP rule began to take shape. When Miyazawa’s electoral reform plan was put to the vote, Ozawa and Hata rallied their supporters to vote against it. The largest opposition party at the time, the Japan Socialist Party (JSP), then introduced a vote of no confidence in the government, which the Lower House passed on June 18, 1993. The following day Ozawa, Hata, and many others defected from the LDP to establish new parties thereby causing the LDP to lose its control of an absolute majority of seats. Miyazawa dissolved the Lower House, which triggered the 1993 election. The results of the 1993 election confirmed the end of the LDP’s legislative monopoly and set the stage for the ultimate passage of the 1994 political reforms. The LDP polled a postwar low of 36.6 percent of the vote, gaining only 223 of 511 seats. The new parties took a considerable number of seats away from the more established parties. Seven non-LDP parties, excluding the Japanese Communist Party (JCP), combined forces to capture an absolute majority of seats and exclude the LDP from the new ruling gov-

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ernment coalition. Hosokawa Morihiro became the first non-LDP prime minister of the postwar period since the LDP came to power in 1955. The establishment of the non-LDP coalition government brought an end to the “1955 system” of postwar Japanese politics—in which the LDP was the governing party and the JSP the opposition (Curtis 1999). In September of 1993, Hosokawa submitted a plan for a mixed system that recommended one nationwide proportional representation (PR) district composed of 250 seats decided by PR and 250 single-member districts (SMD). Although the Lower House passed the plan, the Upper House (House of Councillors) rejected it after defections from JSP members. With his political future and the reputation of the entire non-LDP coalition government at risk, Hosokawa negotiated a compromise with the LDP president on the specifics of the new system to ensure its passage. The reforms that passed combined 300 single-member districts with 200 PR seats. The 1994 reform legislation also accomplished other important changes, including the establishment of a public-finance system for political parties and adjustments to the rules governing the campaign finance system. In less than eleven months the Hosokawa government fell apart when the JSP left the coalition, thus allowing the LDP the opportunity to reclaim its throne. Japan’s Mixed-Member Electoral System

Scholars argue that mixed-member electoral systems offer the best of both worlds—both majoritarianism and PR and both personalized geographic representation and party representation (Shugart and Wattenberg 2001, 2).17 Yet the political consequences of mixed systems are far from uniform due to their differences in such areas as the specific rules governing the ballot or vote component, how the PR and SMD tiers are linked, and the percentage of seats allocated to the PR tier.18 The effects of mixed systems are further influenced by previous organizational strategies and informal practices. To evaluate whether such systems offer the best of both worlds, it is necessary to examine how the specific rules and the preexisting practices affect the behavior of parties and politicians in each country. In Japan, the rules that govern the PR and SMD tiers are of major consequence for election campaigns because they define the specific avenues by which politicians get elected and parties gain representation. First, candidates can only compete in the SMDs that they win outright by capturing a single plurality of votes. Second, the formal rules of the mixed system allow party candidates to be listed simultaneously in the SMD and PR tiers, in what is called dual candidacy. It thus becomes possible to lose the SMD race and yet be “resurrected” because of a high ranking on one of the party’s PR lists.19 This has led to a new breed of Japanese politicians: “zombies,” who return to the Lower House via the PR route despite their loss in

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the SMD tier (Pekkanen, Nyblade, and Krauss 2006). Finally, parties may list candidates only in the PR tier. The specific avenues available for winning a seat should influence campaign strategies and uses of money in Japanese politics. Politicians competing only in the PR tier do not face the immediate pressures of interparty competition as in the SMD contests. Consequently, they should have less need to develop kΩenkai and a personal vote in the way that candidates who are nominated by party leaders to compete in the SMD tier would. On the other hand, the use of dual candidacies by parties may perpetuate the personal vote and kΩenkai of politicians because politicians must foremost focus their efforts on winning the SMD races (McKean and Scheiner 2000, 448).20 The behavior of politicians in Japan is also affected by previous organizational strategies and informal practices. Incumbents devised successful vote-gathering strategies in the SNTV system, which they continue to use in the reformed system. The kΩenkai, for example, developed as an innovative campaign strategy in postwar Japan because politicians could rely on a mass-membership approach to deliver the vote and not be completely dependent on local politicians and community leaders (Curtis 1971, 129). Although much of the original rationale and the factors that led to the creation of kΩenkai in the SNTV system have disappeared, their continued use in the reformed system is a powerful reminder that old habits can persist despite the adoption of new rules. Informal practices not only survive from the past, but also emerge when previous organizational structures interact with the effects of new rules. Created through the merger of the Liberal and Democratic parties in 1955, the LDP has enjoyed a large contingent of incumbents to help it remain a ruling party for most of the postwar period. To facilitate the placement of these incumbents in the SMD and PR tiers, LDP party leaders devised Costa Rica arrangements. Because proportional representatives are required to alternate positions with the constituency representatives in the following election, they must focus their vote-gathering efforts and spend money as if they are competing in the SMD tier. The use and evolution of such informal norms warrant critical attention because they can have a powerful impact on the behavior of parties and politicians. Expectations and Consequences of the 1994 Reforms

To evaluate politicians’ campaign strategies and uses of money in the current system, it is useful to review many of the expectations and observed consequences of the 1994 reforms. As KatΩ Junko (2001) argues, the consequences of Japan’s political reforms were intensively debated, with expectations of the consequences of reform varying considerably. In this section,

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the perspective of Ozawa IchirΩ, a former LDP member who played an instrumental role in Japan’s electoral reform drama, is scrutinized as is the expectations of scholars of comparative and Japanese politics. These viewpoints provide a useful context for understanding the larger debates about electoral reform. Ozawa played an instrumental role in the debates over electoral reform. In his best-selling book, he argues that a switch to an SMD system, as used in the United States, the United Kingdom, and Canada, would correct some of the deficiencies of Japan’s SNTV system (Ozawa 1994). Like Ozawa, many reformers based the hope for a two-party system on the empirical observation of Duverger’s Law and the historical experience of the British party system. In simple terms, Duverger’s Law states that the simple-majority, single-ballot system (that is, simple plurality rule) favors the two-party system (Duverger 1954, 217). Although party leaders like Ozawa preferred a pure SMD system or no reform at all, they compromised on a mixedmember majoritarian system that combines 300 SMD and 200 PR seats.21 Before Ozawa left the LDP, he strongly advocated that Japan adopt a pure plurality system. He blamed the SNTV system for the lack of meaningful debates on policy and for the high costs of elections because LDP members had to compete against same-party candidates in addition to other parties’ candidates. Ozawa writes: The present medium-sized constituency is the institution most responsible for sustaining and encouraging the comfortable, mutual dependence between the ruling and opposition parties. Moreover, the multi-seat electoral district system forms the basis of the present laws and regulations on political contributions and election campaigns; it is also at the root of our “money-politics” problem (1994, 63).

Ozawa believed that a single-seat system would not only promote more policy-oriented debates and decrease the costs of elections, but also encourage a stable and responsible government where alternation between two major political parties is possible. He did not support, however, a mixed-member electoral system because smaller opposition parties were likely to survive in the PR tier and make the realization of a two-party system more difficult. Politicians such as Ozawa adopted a new electoral system at a particular historical juncture based on a combination of short- and medium-term interests related to their own survival and that of their party organizations. Because they had to compromise with each other to pass the reform legislation, many of their expectations were not met. To examine a more complete picture of the debates over electoral reform, it is useful to summarize some of the research conducted by scholars of Japan and comparative politics. Many scholars argued that the reforms would decrease the importance of the personal vote and money because the possibility of intraparty compe-

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tition has been eliminated at the election stage (Reed and Thies 2001b; Cox and Rosenbluth 1995). If politicians no longer face intraparty competition, and instead can compete against the policies articulated by other parties’ candidates, the assumption is that they will be less likely to rely on personalized support. According to one view, the end of intraparty competition hopefully signifies that LDP members will not have to be as preoccupied with as much “resource-grubbing” as was necessary under the SNTV system (Cox and Rosenbluth 1995, 372). Other scholars suggest that the end of intraparty competition will render kΩenkai “unnecessary” and allow parties the opportunity to organize district branches (Reed and Thies 2001b, 395). Scholars also anticipated that the redistricting of the country into single-member districts and changes to the campaign finance regulations would transform the landscape of Japanese politics. When the election system was changed, the 129 multimember districts used under the SNTV system had to be divided into 300 single-member districts. Many suggested that the redistricting into smaller localities would weaken the kΩenkai and contribute to more party-centered elections (Reed and Thies 2001b; Christensen 1998). Other scholars, however, were skeptical that the SMD tier would reduce campaign costs, because the reforms placed few limitations on the ability of politicians to freely raise and spend money (Curtis 1999; Sasaki et al. 1999). The scholarly literature further highlighted the importance of the new public-subsidy system for political parties to mitigate the expensive cost of election campaigns. Officials calculate the public subsidy to political parties at 250 yen per person in Japan (or $2.16 at the January 2006 exchange rate), which totaled over 31 billion yen in 2006 ($267 million).22 To receive the subsidy, candidates are required to establish what are called “party branches” in their district. These offices are usually, but not always, the main local office, which is separate from the government-provided offices in Tokyo.23 The 1994 reforms significantly revised the Political Funds Control Law that regulates political funds in Japan, and which is detailed in Appendix 1. The revisions were intended to increase transparency and to place stricter regulations on political contributions (Reed and Thies 2001b). In the prereform system, the disclosure limits were set at a relatively high figure of 1 million yen. Also, politicians created an unlimited number of financial groups to receive political contributions. By instructing their donors to contribute less than the disclosure limit to multiple accounts, they could avoid disclosure of their sources of income (Hirose 1989; Woodall 1996, 97–98). In contrast, the present system requires the disclosure of the names of all donors who contribute more than 50,000 yen ($431 in 2006). The new campaign finance regulations allow politicians to create one fund agent that they use to collect and spend political funds. Until the law was revised in 1999, fund agents were allowed to receive a maximum of

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500,000 yen ($4,300 in 2006) from corporations and 1.5 million yen from individuals ($12,900 in 2006). The revised law now prohibits corporations from making donations. These restrictions stand in contrast to the local party branches that have no maximum limits on corporate or individual contributions. The new regulations continue the past practice that allows politicians to create an unlimited number of other such political organizations as kΩenkai. However, corporations are no longer allowed to make direct contributions to kΩenkai, and individual donors cannot contribute more than 1.5 million yen per year ($12,900 in 2006). Politicians can transfer funds between the local party branch, fund agent, and kΩenkai, which allows them to freely raise and spend money. Table 1.1 summarizes many of the main features between Japan’s SNTV system and the mixed system. The end of intraparty competition and the introduction of new campaign finance regulations and subsidy system for parties were cited as major reasons why the 1994 reforms would fundamentally alter the nature of Lower House election campaigns. However, many of the first studies underscore the divergence between the general expectations for the reforms and

Table 1.1

Comparison of Japan’s SNTV and Mixed System SNTV, 1947–1993

Mixed-Member, 1996–present

Districts

129 multimember with 2–6 seats (511 total seats in 1993)

300 single-member districts and 180 proportional representation seats (480 total seats in 2000)

Competition

Intraparty and interparty at election stage

Interparty at election stage

Features

Voters select one candidate

Campaign Finance Regulations

1 million yen disclosure limit; unlimited kΩenkai allowed

Main Ruling Party

LDP

Voters select one candidate and one party Politicians allowed to compete simultaneously in SMD and PR tiers Subsidy for political parties introduced Party branches: no restrictions on donations Fund agent and kΩenkai: individuals may contribute up to 1.5 million yen; companies allowed to contribute up to 500,000 yen to fund agent until 1999 LDP

Main Opposition

JSP

NFP in 1996 DPJ after 1998

Note: The LDP lost power for ten months and twenty days beginning in 1993. See appendixes for more information on the campaign finance regulations, Lower House electoral results, and lists of prime ministers and coalition governments.

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the actual outcomes. According to ·take Hideo (1998a), the kΩenkai refused to disappear overnight, since many LDP politicians created them in the first election held under the new rules in 1996 in anticipation of interparty competition. Moreover, Kataoka Masaaki and Yamada Masahiro (1998), in their study of the effects of new electoral laws on the kΩenkai in the 1996 election, note that their expectations about reform differed considerably from what they observed at the local level.24 Another scholar found no evidence to indicate the development of a fundamentally different style of election campaigning despite the advent of the single-member districts (Christensen 1998, 1003). A major weakness of these studies, however, is that their claims are based on the study of only one election cycle. In a more recent study, Ellis Krauss and Robert Pekkanen (2004) rely on interviews with Japanese politicians to evaluate how the vote mobilization functions of kΩenkai have changed as a result of electoral reform. They argue that politicians continue to find kΩenkai a useful tool for catering to a broad and diverse range of interests in the new single-member constituencies. A shortcoming of this study is that the authors do not base their arguments on a nationwide sample and do not evaluate other consequences of reform on kΩenkai apart from their vote mobilization functions. Beyond the realm of campaign strategies, a group of scholars in Japan used statistical analysis and case studies to examine the flow of money at the district level (Sasaki et al. 1999). Sasaki Takeshi of the University of Tokyo and his associates spent many months in collaboration with the Asahi newspaper collecting and analyzing the annual disclosure reports for all winning candidates in the 1996 election. One of the purposes of the study was to understand how politicians raised and spent money through the party branch, fund agent, and kΩenkai. But since Sasaki and his collaborators did not include the losing candidates in the 1996 election in their data collection, it is extremely difficult to determine how campaign strategies and the use of money shape victory and defeat. The exclusion of losing candidates omits a large number of candidates who competed for the first time under the new rules.25 In this volume, I build on these prior efforts through the collection and examination of campaign finance reports for winning and losing candidates in both the SMD and PR tiers. For the first time, this analysis provides a nationwide sample of all incumbents and new candidates in the first three elections held in the reformed system. The results of the analyses cast new light on the impact of the 1994 reforms on Japan’s political system. A Note on Research Design

Many previous studies on Japan’s mixed electoral system rely on case studies of particular electoral districts or prefectures and are based on the analy-

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sis of a single election.26 This makes it difficult to determine whether the results hold up across space and time. In the case of campaign finance, existing studies have used incomplete data. To build on these studies, I chose a “mixed-method” approach that combines quantitative and qualitative research. I use statistical analysis to examine annual campaign finance disclosure reports for the three election years of 1996, 2000, and 2003. The qualitative component relies upon case studies and elite interview data.27 Both methods provide a more complete and nuanced picture of Japan’s political landscape. To date, scholars have not analyzed complete campaign finance reports for Japan that are disclosed yearly. Instead, most of the current studies use the figures published for the short campaign periods (Reed 2003; Cox and Thies 1998 and 2000; Scheiner 2006). As Reed (2003, 160) notes, the campaign-period data are readily available but the annual data are almost impossible to obtain. One reason is that the collection and publication of these reports are not centralized, but instead are conducted in Tokyo by the Ministry of Home Affairs and the electoral commissions established in each of Japan’s forty-seven prefectures.28 A Focus on District-level Dynamics and Political Actors

Many political reformers in Japan, such as Ozawa IchirΩ, hoped the adoption of an SMD system would lead to a two-party system, a hope based on Duverger’s Law. But as Gary Cox (1997, 190–192) argues, whether Duverger’s Law works in practice depends on the factors that drive the links between the district and national level, such as how the prime minister is elected or how politicians raise campaign funds. In this study, I look at the district level to consider the complex dynamics that shape patterns in the nationally aggregated data. Details on the ability of the LDP to capture seats and votes in the Lower House through the use of the national election returns are presented in Appendix 2. In the 1993 election, the LDP received a relatively low share of seats (36.6 percent) because many LDP members defected to create or join new political parties. In the 1996, 2000, and 2003 elections, the LDP increased its seat share from 47.8 percent (239 of 500 seats) to 49.4 percent (237 of 480 seats).29 In the 2005 election, the LDP captured 61.7 percent of the seats (or 68.1 percent with its coalition partner, the Clean Government Party [CGP]) in a landslide victory over the DPJ. What specific strategies have the LDP candidates adopted for their party to survive and prosper in the new mixed system? How important has the role of money been in postreform, election campaigns? Why did the DPJ fail to unseat the LDP during this time? Using campaign finance data as well as case studies, I examine how

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Money Politics in Japan

money is linked with the electoral incentives faced by politicians and parties in the Lower House. The campaign finance reports are analyzed for all LDP and DPJ members in the SMD and PR tiers. The case studies provide a more detailed analysis of specific election districts and campaign strategies in the reformed system. How politicians and parties devise strategies at the district level determines which parties win elections and shapes the quality of democracy in Japan. Ethan Scheiner’s important study examines LDP success and opposition failure in Japan, using both cross-country and district-level comparisons. He argues that the reason for opposition failure in Japan lies in a combination of clientelism, fiscal centralization, and institutional protections for the principal beneficiaries of the clientelist system (Scheiner 2006, 3). In clientelist systems, clientelist parties (for example, the LDP) create direct bonds with voters through the use of the pork barrel. Because the central government controls funding, local organizations and voters have strong incentives to align with the ruling party. Scheiner seeks to understand the impact of clientelism using districtlevel data in Japan. Following Gary Jacobson (1990), he examines the opposition’s inability to field “quality” candidates. He defines quality candidates as those with considerable government experience, including former prefectural governors or assembly members, former city mayors, former Upper House members, and candidates who “inherited” a seat from a relative. Scheiner suggests that the inability of the DPJ to field quality candidates is a major reason for its failure to win SMD races. Building on the concept of candidate quality used by Scheiner and others, I examine the use of money by different types of candidates fielded by the LDP and DPJ. In particular I compare incumbents and new candidates. In the case of Japan, the concept of candidate quality helps explain the abilities of politicians to accrue and utilize resources, including money and personalized support, in their efforts to secure victory. Politicians’ ability to raise money under the new system and the impact of such resources on election outcomes are examined in Chapters 2 through 4. Campaign finance disclosure reports are examined in more detail and several case studies that highlight the ability of new candidates in the LDP to adapt to the reformed system are presented. In Chapter 4 what kind of spending matters the most in shaping politicians’ share of the district vote is discussed. This study further illuminates the strategies of party leaders concerning the placement of candidates in the SMD and PR tiers and the evolution and consequences of the 1994 reforms on informal practices. Chapter 5 focuses on the strategies of party leaders in deciding the placement of candidates in the SMD and PR tiers and the consequences for politicians’ incentives to raise money; Chapter 6 scrutinizes the impact of the mixed electoral system on the

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use of kΩenkai. Chapter 7 details the emergence and consequences of Costa Rica arrangements. In the concluding chapter, I explore Japan’s evolving political landscape, including the LDP landslide victory in the 2005 election. Notes 1. For a detailed discussion of the passage of the 1994 reforms, see Curtis (1999) and Reed and Thies (2000a). See Schlesinger (1999) for an account of the corruption scandals preceding the reforms. 2. Japan has a bicameral parliament, consisting of the House of Representatives (Lower House) and the House of Councillors (Upper House). Members to the Lower House are elected to four-year terms. These terms often end early because the prime minister may dissolve the chamber and call elections at any time. In contrast, Upper House members are elected to 6-year terms where half the seats are up for election every 3 years. Currently, there are 146 prefecture-based districts that use SNTV and 96 open-list proportional representation seats for a total of 242 seats. 3. Mixed-member electoral systems combine two features of electoral system design: proportional systems, which have multiseat districts, typically with party lists; and majoritarian systems, which usually have single-seat districts with plurality rule (Shugart and Wattenberg 2001). 4. Note that for space reasons I have placed many of the technical details, including a discussion of Japan’s political finance system, in the appendixes. 5. For a discussion of the term “money politics” or more specifically “moneypowered” politics (kenkin seiji), see Johnson (1975). 6. The framework I use is called the “new institutionalism” by many social scientists. The analyses “derive from microeconomics, game theory, and social choice of the effects of decision-making rules and institutional structures on outcomes” (Grofman 1989, 1). One of the central premises of the institutional framework is that the interaction between institutions and organizations can limit or encourage the extent of institutional change (North 1995). 7. See, for example, Duverger (1954), Riker (1982), and Cox (1997). 8. See, for example, Budge, Robertson, and Hearl (1987); Gabel and Huber (2000); and Laver (2001). 9. The personal vote refers to the portion of politicians’ electoral support reflected in their personal qualities, qualifications, and record (Cain et al. 1987, 9). See, for example, Carey and Shugart (1995) and Cain, Ferejohn, and Fiorina (1987). 10. The formal rules I examine include the laws regulating the use of the single-member districts and proportional representation tiers, the “best-loser” provision, as well as the new campaign finance regulations, which I explain at length in subsequent chapters and in Appendix 1. 11. While the Japan Socialist Party was the major opposition party in Japan’s SNTV system, two major opposition parties have challenged the LDP since the electoral system was changed: the New Frontier Party (1995–1998) and the Democratic Party of Japan (1998–present). 12. Previously, the Democratic Party won a total of fifty-two seats in the 1996 election. It was formed earlier that year under the leadership of Hatoyama Yukio, grandson of early postwar Prime Minister Hatoyama. It changed its English name to the Democratic Party of Japan in 1998.

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13. In the 1993 election, for example, candidates competed for 511 seats distributed across 129 multimember districts. 14. Indeed, in one study that classified electoral systems around the world, Japan’s SNTV system ranked the second most likely to encourage a personal vote after the Philippines (Carey and Shugart 1995, 429). 15. This is not to say that the SNTV system “caused” corruption; rather misconduct may have been easy to perpetuate when the rules and penalties of the system were ambiguous or full of loopholes. 16. Japan’s SNTV system was also badly apportioned, which meant that the rural areas received more seats per capita than urban areas (Curtis 1999). Thus, the LDP received the most support from rural areas and as such benefited from this arrangement because it could win these districts with fewer votes. This was another reason why the SNTV system was disliked. 17. In voting systems, the basic principle of majority rule is that more than one half of the voters must agree for a candidate to win. A relative majority (also called plurality rule, winner-take-all, or first-past-the-post) requires that the winner receive the largest amount of votes. Systems that use majority and plurality rule are associated with personalized geographic representation because the voters elect candidates that represent specific constituencies. In contrast, voters in proportional representation (PR) systems vote for political parties. In open-list PR systems, voters decide their preferences for specific candidates on party lists; in closed-list PR systems, the parties decide the rankings of candidates on the party lists. See Farrell (2001) and Cox (1997) for a detailed discussion of different electoral systems. 18. The electoral tier is the level where votes are converted into seats. In Japan’s current mixed system, the SMD tier refers to the 300 single-member districts that use plurality rule, whereas the PR tier refers to the 180 seats that utilize proportional representation. 19. Alternatively, because parties may rank their candidates at the same PR list positions, some candidates are selected through the use of a “best-loser” provision, which is calculated on the basis of their performance in the SMD tier by taking the number of votes the candidate receives divided by votes won by the first-place finisher. 20. This is because their performance in the SMD tier is often pivotal to their prospects of winning a PR seat through the formal use of the “best-loser” provision. 21. The number of PR seats was subsequently reduced to 180 before the 2000 Lower House election. 22. Source, Ministry of Home Affairs website, available online at www.mha.go.jp. Most of the financial figures reported in this book are given first in Japanese yen followed by US dollars. The January 2006 exchange rate was about 116 yen to the dollar. The most common exchange rates used are 108 yen in 1996 = $1; 106 yen in 2000 = $1; and 116 yen in 2003 = $1. 23. Not all parties in Japan opted to create local party branches. The Japanese Communist Party (JCP), for example, already had local party branch chapters, but these are more generally party offices. In addition, the JCP declines the political subsidy from the government. 24. In a survey they sent to newspaper bureaus, newspaper reporters from twenty-one prefectures replied that the only difference between a kΩenkai office and the local party branch was the new party signboard. In other prefectures, however, the replies from their survey provided evidence of more party-centered campaigns and stronger local party chapters. 25. One of the participants in the Sasaki et al. study has since collected addi-

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tional data for major party candidates in 1996 and 2000, although his analysis is limited to expenditures from the local party and fund agents. See Kawato Sadafumi (1999, 2002). 26. See, for example, ·take Hideo (1998), Albert Seligmann (1997), Sato Seizaburo (1997), and Cheol-hee Park (1998). 27. I selected a random sample of ten districts each from the North and South KantΩ regions of Japan that contain the prefectures of Kanagawa, Chiba, Yamanashi, Gunma, Saitama, Tochigi, and Ibaraki. To examine these cases, approximately fifty politicians in the LDP and DPJ were interviewed—both winning as well as losing candidates. It was also necessary to request information and direct questions to politicians’ staff members at their Tokyo or local office. I do not detail all of the cases but present a portion of them in two chapters. For additional information about the case selection or to read about additional cases not included in this book, see Matthew Carlson (2003, 2006b). 28. Following government reform, the Ministry of Home Affairs now belongs to the Ministry of Public Management, Home Affairs, Posts and Telecommunications. I use the former and much shorter name throughout this book. See Ian Neary (2003, 125) for a list of current and former names of Japanese bureaucracies mentioned in subsequent chapters. 29. To remain in the governing party during this time and to bolster its support in the Upper House, where it lost majority control in 1989, the LDP formed a coalition government with the Clean Government Party and other smaller parties. See Appendix 4 for a list of coalition governments since 1993.

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2 Money and Candidate Quality

MONEY HOLDS SIGNIFICANT SWAY OVER the political fortunes of new candidates and incumbents in Japan’s Lower House. Politicians collect money from a variety of sources, including contributions, fund-raising activities, and the party organization. They then spend it on such organization expenses as personnel and campaign vehicles and on political activities like karaoke parties and trips to hot springs. Politicians may also use money indirectly (and sometimes directly) to “buy” votes and to curry favor and influence over supporters, donors, and other politicians (Fukui and Fukai 1999; Cox and Thies 2000). The ability of incumbents and new candidates in Japan to raise money depends on their personal qualities, qualifications, and record. The concept of “candidate quality” explains the abilities of politicians to accrue financial resources in their efforts to secure victory. If candidate quality is important in Japan, it should be reflected in the amounts of money collected by incumbents and new candidates of each party. At the same time, we should be able to discern the effects for additional measures for tapping quality, such as whether a candidate inherited the seat from a close relative and the amounts of money raised. In the analysis of the campaign finance disclosure reports presented in this chapter, I demonstrate the formidable advantages possessed by incumbents and other high-quality candidates in their abilities to raise money. Because the impact of previous organizational legacies is uneven across parties, the impact of candidate quality on money varies between the LDP and the DPJ members. My analysis shows that advantages of incumbency differ depending on the party. In particular, LDP members are privileged beyond the general advantages inherent in incumbency. The legacy of the LDP as Japan’s dominant party appears to interact with the privileges incumbents acquired in ways that boost the ability of the party to survive and prosper.

19

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Candidate Quality in Comparative Perspective

In the United States as well as in Japan’s new SMD tier, it is commonly assumed that candidate-specific characteristics and the previous record of candidates shape the ability of politicians to raise money and to win election. Money is necessary to compete against opponents from other political parties in the winner-takes-all, single-member district system. However, the ability to raise money hinges very much on the “quality” of the politician or candidate. According to Gary Jacobson (1989, 775), “It takes a vigorous, well-funded challenger to offer voters the kind of alternative—a ‘qualified’ candidate raising troublesome issues—that can threaten the incumbent with premature retirement.” Jacobson (1993, 115) also notes that “good candidates attract money, and the promise of money attracts good candidates.” Scholars have advanced theoretical constructs to measure the quality of candidates. These models have proven extremely useful in research on members of the US Congress. Jacobson (1990) asserts that the main indicator of candidate quality is whether the candidate has previously held elective office. Donald Green and Jonathan Krasno (1988) propose an alternative measure for quality that includes occupational background, political experience, and fame. Both approaches recognize the theoretical importance of candidate quality in Congress, although scholars disagree on the specific indicators that should be used to measure the concept. The concept of candidate quality, and its ability to shape electoral victory, may be different in Japan than in the United States. A victory margin of over 128,000 votes accumulated by an LDP candidate, for example, was not surprising to many in Japan even though the candidate was almost a complete political amateur. The candidate was the young daughter of former late Prime Minister Obuchi KeizΩ. The electoral machine she inherited was so strong that the DPJ did not even bother to field a single challenger against her in the 2000 and 2003 elections. Candidates who lack previous experience in elective office are considered strong quality challengers if they are successors to an existing campaign organization, as is the case with Obuchi’s daughter. These “hereditary” Diet members (nisei giin) are difficult to beat unless another such challenger can make the election more competitive. In addition to the importance accorded to hereditary strength, scholars examine the quality of Japanese Lower House candidates in terms of their previous occupation (Park 1986; Ueda 2000; Scheiner 2006). Among the many routes to power in the Lower House are the bureaucracy and local government. Scholars and journalists in Japan often indicate whether politicians are former bureaucrats or have previously won local elective office. They note that former bureaucrats keep close ties to their former agencies, and use such ties to advance their political careers (Park

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1986). Local politicians, on the other hand, while lacking close ties with central agencies, have local support and political experience that strengthen their bid for a Lower House seat. If candidate-specific characteristics shape the ability of politicians to accrue resources as well as to establish and maintain a personal vote, then which attributes matter the most under the new system? To identify these factors, let us look at the total amounts of campaign income to determine the extent that candidate-specific characteristics (i.e., incumbent status or former bureaucratic experience) are associated with the ability of politicians to raise money. Incumbents and New Candidates

In debates over the political consequences of Japan’s electoral-system change, many scholars suggest that the resource asymmetries between candidates in the same party organization are not likely to wither, despite the adoption of new rules. For the LDP, incumbents are naturally expected to convert whatever resource advantages or personal experience they possessed under the old regime to win reelection in the new system (·take 1998a; Pempel 1998; Curtis 1999). Indeed, Christensen (1998) and Kataoka and Yamada (1998) find considerable evidence that incumbent politicians gained considerable partisan advantages before the 1996 election by successfully receiving the party nomination in the district that contains a part of their previous voting base. These and other scholars claim that the new electoral system is unlikely to have the intended effect of more party-centered election campaigns, because incumbent politicians were unlikely to abandon their personal votegathering strategies (Pempel 1998; Curtis 1999; Kerbo and McKinstry 1995). In their discussion of the likely effects of the new electoral laws, Harold Kerbo and John McKinstry (1995, 98) argue that the rules will almost certainly favor conservative politicians who have risen under the mentorship of old party elites in the LDP. Similarly, T. J. Pempel (1998) and Gerald Curtis (1999) suggest that incumbents have little reason to abandon their personal support networks and that the personal vote under the new system might actually increase. The advantages that incumbents possess should also be different depending on whether the politicians are from the ruling or opposition parties. Some scholars suggest that LDP incumbents may have specific advantages because of their ability to access state resources as part of the ruling government. The long tenure of the LDP as the dominant ruling party is believed to facilitate its access to state resources and encourage routinized ties between legislators and constituents to exploit this access (Calder 1988, 66).

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In a similar vein, the LDP is viewed as a clientelist party that can create direct bonds with voters through the use of the pork barrel. The capacity of incumbents to use government patronage is the most obvious advantage; the ruling parties, which usually control spending, can use provision of public employment or subsidies and funding of public works projects to gain the support of numerous groups (Scheiner 2006, 17). As such, the LDP and its members derive benefits from being the incumbent ruling party, which helps to perpetuate their rule. This suggests that incumbents in the ruling party should have a particular advantage in their ability to raise funds in contrast to incumbents in the opposition parties. If LDP incumbents are likely to survive through particularistic strategies, is this also the case for new candidates competing since the system change in 1996? New candidates may differ from more senior members in their ability to gather financial resources and, ultimately, to spend money on securing their district.1 As one scholar argues, new candidates with limited resources may have more incentives to use the services of the party and to seek its direct financial help (Epstein 1986). However, incumbent and newcomer status may be too general an indicator to capture other candidate-specific attributes that might influence the ability of actors to collect resources. Measuring Total Campaign Income

The Political Funds Control Law (PFCL, Seiji Shikin KiseihΩ) is the main set of rules that regulates campaign finance in Japan. The PFCL was established in 1947, enacted in 1948, and revised several times since then. In addition to the PFCL, two other laws are also relevant to the regulation of money: the Public Office Election Law (KΩshoku SenkyohΩ) established in 1950, and the Political Party Subsidy Law (PPSL, SeitΩ JoseihΩ) established in 1994. The former deals primarily with the rules related to election campaigns and the use of funds during the official twelve-day campaign period. The essential provisions of the PFCL and PPSL are detailed below; a more extensive discussion of the PFCL and PPSL is provided in Appendix 1. Before 1994 the first major revisions to the PFCL were passed and enacted in 1975. The changes strengthened disclosure rules, introduced narrower definitions for classifying political organizations and parties, and placed quantitative restrictions on certain types of contributions. Further revisions occurred in 1980 when politicians were limited to the creation of a single fund agent (seiji shikin kanri dantai). Despite the revisions, political organizations that contributed less than 1 million yen ($4,200 at the January 1980 exchange rate) were not required to disclose their name (Hirose 1989). Thus, politicians were able to avoid disclosure by establishing multiple support groups and instructing their donors to contribute the maximum amount to each one.

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23

I begin this analysis with a detailed comparison of the total amounts of annual income reported in Japan’s SNTV and post-reform systems. This section, however, is limited to only the LDP and to a total of six elections, three in the SNTV system, and three in the reformed system. There are two cautions about the use of total income for Japan’s pre-reform system. First, the disclosure limit of 1 million yen and the ability of many politicians to avoid disclosing the identity of their donors mean that the actual levels of income are likely to be higher than the reported amounts. This is less of a concern for the post-reform figures given the much lower disclosure limit of 50,000 yen ($431 in 2006). Second, the source book used for the SNTV system does not correct for the financial transfers that may occur among the political organizations belonging to each politician. If the transfers could be accounted for, the actual amounts of income would be slightly less.2 In contrast to the figures that pertain to the SNTV system, I have corrected for any double counting that may occur in the transfer of funds between organizations belonging to the same politician.3 The stricter regulations on disclosure and contributions since 1994 suggest that the reported figures are more likely to reflect reality than was possible in the SNTV system. At the same time, the quality of the post-reform data is far from perfect, for political actors often have incentives not to disclose the entire ebb and flow of money in the political system. The numerous campaign finance scandals that have emerged since 1994 highlight this important point. Clearly some caution is necessary when using campaign finance data in Japan (and in other countries). For the post-reform system, this chapter focuses on the total income reported by politicians from the LDP and DPJ. The collection of the political finance disclosure reports are filed by individual politicians for three types of political organizations: (1) local party branches (seitΩ shibu); (2) fund agents (shikin kanri dantai); and (3) other political groups (sonota no seiji dantai) that include kΩenkai.4 Typically, politicians designate their main local office as the party branch, which is then subject to the laws designated by the PFCL and PPSL for the collection and spending of funds, including the political party subsidy.5 Politicians are allowed to establish a single fund agent in order to collect and spend funds.6 Finally, politicians can create an unlimited number of other political groups, including kΩenkai. The PFCL specifies a variety of qualitative and quantitative controls on who can contribute and who can receive funds. The qualitative restrictions are primarily specifications about who is allowed to contribute. For example, foreign companies and companies that receive a subsidy or funds from the national or local government are not allowed to contribute to any of the political organizations created by politicians or parties. The quantitative controls specify the amounts of contributions that each political organization can receive from companies, individuals, and other groups. There are

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no restrictions on the amount of contributions made to the local party branches. The 1994 reforms included a provision that further revisions be made to the PFCL after a five-year period. The target was corporate contributions to political organizations outside the party branch. In 1999 the PFCL was revised to prohibit companies and labor unions from contributing to fund agents; previously, they could contribute a maximum of 500,000 yen annually ($431 in 2006). Companies and labor unions are further prohibited from contributing to kΩenkai. Individual donors, on the other hand, are allowed to contribute up to 1.5 million yen annually ($12,900 in 2006) to both fund agents and kΩenkai. Comparison of Japan’s SNTV and Mixed Systems

How do the amounts of annual income reported by LDP politicians for three election years during the SNTV system compare with that reported by LDP politicians for three election years under the mixed system?7 To carry out this analysis, the same measure of candidate quality (for example, incumbent status) is used to consider the impact of the 1994 reforms on money politics in Japan. The estimates for both election systems allow examination of the differences in the fund-raising abilities of incumbents and new candidates in the LDP across time. Using a handbook on political funds published annually before 1996, the total amount of income reported by LDP politicians can be estimated, although some of the cautions already noted should be remembered.8 Like the figures collected for the post-reform system, these estimates are based on the amounts of reported income politicians submit to the relevant national and local election authorities. The top half of Table 2.1 presents the total income for both incumbents and new candidates of the LDP for the last three elections that occurred under the SNTV system (1986, 1990, and 1993). The sum raised by incumbents averaged a high of 255 million yen ($2.4 million) in 1986, which subsequently decreased in 1990 and 1993. In comparison, new candidates raised as much as 162.8 million yen ($1.5 million) in 1986 with substantially smaller amounts collected in 1990 and 1993. The mean average for these three elections is approximately 233.3 million yen ($2.2 million) for incumbents and 102.4 million yen ($966,000) for new candidates. Overall, the total amount of income for all of the LDP members is 213.1 million yen ($2 million dollars).9 Although these figures are subject to the previously mentioned caveats, some tentative comparisons can be made. The bottom half of Table 2.1 presents the total income of LDP members in the first three elections held under the mixed system (1996, 2000, and 2003). Although LDP incumbents averaged a much smaller 128.4 mil-

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25

Average Income Collected by LDP Members

Election Year

Incumbents

New Candidates

All

1986 Income, millions of yen N

255.0 ($2.4 million) 162.8 ($1.5 million) 238.2 ($2.2 million) 193 43 236

1990 Income, millions of yen N

240.8 ($2.3 million) 249

80.1 ($755,000) 48

214.9 ($2.0 million) 297

1993 Income, millions of yen N

204.2 ($1.9 million) 175

64.2 ($926,000) 26

186.1 ($1.7 million) 201

1986–1993, mean income

233.3 ($2.2 million)

102.4 ($966,000)

213.1 ($2.0 million)

1996 Income, millions of yen N

137.7 ($1.3 million) 200

61.5 ($580,000) 112

110.3 ($972,000) 312

2000 Income, millions of yen N

129.5 ($1.2 million) 248

60.0 ($566,000) 67

114.8 ($1.1 million) 315

2003 Income, millions of yen N

118.1 ($1.1 million) 217

45.0 ($425,000) 68

100.7 ($950,000) 285

1996–2003, mean income

128.4 ($1.2 million)

55.5 ($524,000)

108.6 ($1.0 million)

Sources: Seiji Shikin Zensho (Complete Book of Political Funds), KanpΩ (Public Registrar) (Tokyo: Ministry of Finance), and KΩhΩ (Prefectural Bulletin), various years. Note: N represents the number of LDP politicians who filed reports. Incumbents are coded if they won a seat in the previous election. New candidates are coded if they have never previously won a seat in the Lower House. Former incumbents are excluded. For 1996–2003, all SMD-only, PR-only, and dual-listed politicians are included in the averages.

lion yen ($1.2 million) and new LDP candidates raised only 55.5 million yen ($524,000), both amounts are slightly more than half that raised under the SNTV system. Indeed, the average amount of income for each LDP member from the first three elections in the mixed system is approximately 108.6 million yen ($1 million). The general trend suggests that LDP politicians are raising much less money in the mixed system than under the SNTV system. This analysis of the SNTV and mixed system highlights the importance of candidate quality in terms of the fund-raising abilities of different LDP members. Incumbents clearly have a strong advantage over new candidates, and this advantage remains despite the adoption of the mixed electoral sys-

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tem. A comparison of the differences in the amounts raised by incumbents and new candidates in each system shows that the power asymmetries were more pronounced under the SNTV system. For example, the fund-raising gap between incumbents and new candidates was much larger in 1990 than in 1996. The use of campaign finance reports from the SNTV and mixed systems highlight the salient links between specific candidate attributes and money politics for the LDP. According to the institutional approach, the collection of large sums of money is useful to the election-oriented goals of Japanese politicians. Moreover, the amounts raised by LDP politicians are invariably colored by the long-dominant position of the LDP in Japanese politics. To further apply the concept of candidate quality to fund-raising in the mixed system, it is important to compare the LDP with the main opposition party, the DPJ. Incumbents and New Candidates in the DPJ

How the opposition fares in the quest for campaign finances is consequential not only for executing election campaigns, but also for the development of the party system. Opposition members from the DPJ are likely to encounter different capabilities and constraints in contrast to LDP members. First, because the history of the DPJ is relatively new, the party lacks large numbers of seasoned political veterans. In the 1996 election, the “old” Democratic Party won a total of fifty-two seats, qualifying it as the second strongest opposition party after the New Frontier Party. It did not officially become the “new” DPJ and the largest opposition party until after the collapse of the NFP in 1998. For the DPJ to defeat the LDP in the mixed-election system, it must nominate a candidate for as many of the 300 SMDs as possible.10 If the DPJ, however, is unable to field enough high-quality candidates, it is difficult to compete in districts where LDP incumbents or highquality challengers are running. Second, the DPJ is not part of the ruling party or coalition, which further affects its overall capabilities and constraints as a party and for its individual members. A case in point is the lack of regular access to government resources and the pork barrel that DPJ members do not have but LDP members have long enjoyed. In consequence, many DPJ members do not need to rely on personal vote-gathering strategies such as kΩenkai to the same extent as LDP members. Since kΩenkai are expensive to maintain, DPJ members have less need to raise large sums of money than do their LDP counterparts. Using the same measure of candidate quality for the LDP, Table 2.2 presents the average amounts of income for DPJ members in 2000 and 2003, the years when the second and third elections were held under the

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Money and Candidate Quality Table 2.2

27

Average Income Collected by DPJ Members

Election Year

Incumbents

New Candidates

All

2000 Income, millions of yen N

58.2 ($549,000) 93

25.6 ($242,000) 144

38.4 ($362,000) 237

2003 Income, millions of yen N

50.8 ($438,000) 123

20.2 ($174,000) 134

34.7 ($299,000) 257

2000–2003, mean income

54.5 ($470,000)

22.9 ($197,000)

36.6 ($316,000)

Sources: KΩhΩ and KanpΩ, various years. Notes: Income figures are not adjusted for inflation. N represents the number of DPJ politicians who filed reports. Omitted are the cases where the amount of income could not be determined. All SMD-only, PR-only, and dual-listed politicians are included in the averages. Incumbents are coded if they won a seat in the previous election. New candidates are coded if they have never previously won a seat in the Lower House. Former incumbents are excluded.

new rules. The average for both years for all members came to approximately 34.8 million yen ($300,000), which pales in comparison with the LDP average of 111.1 and 93.3 million yen ($1 million and $880,000) for LDP members in 2000 and 2003, respectively. The figures also confirm the importance of incumbent status for the fund-raising capabilities of DPJ members. In both election years, DPJ incumbents raised more than double the amount of income than did new candidates. The major difference with LDP incumbents is mostly in terms of the total funds raised. Indeed, if we create a list of the politicians who collected the most income in 2003 (see Table 2.3), the highest position achieved by any DPJ member is fifteenth place. This position is held by a former LDP member, Ozawa IchirΩ, who was elected president of the DPJ in 2006. Not surprisingly, LDP members place at the top of this list; many of whom have been reelected multiple times or are affiliated with major LDP factions. For example, Kamei Shizuka was the leader of the Kamei faction in 2003 and was able to amass nearly 700 million yen ($6 million). Types of Incumbents and Seniority

Another avenue for exploring the concept of candidate quality in the DPJ and the LDP is to examine the average amounts of campaign income by the number of terms that politicians have been elected. It is logical that politicians who have served more terms should be able to raise more funds than members who have been reelected fewer times (Taniguchi 1999). The DPJ not only has a smaller base of incumbents, but only a small number of these incumbents have been reelected more than four times. To capture this possi-

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Money Politics in Japan Politicians with the Largest War Chests in 2003

Names 1. Kamei Shizuka 2. MutΩ Kabun 3. Hiranuma Takeo 4. Yamasaki Taku 5. AsΩ TarΩ 6. Jimi ShΩzaburΩ 7. Mori YoshirΩ 8. Nakagawa ShΩichi 9. Nakagawa Hidenao 10. Takebe Tsutomu 11. Omi KΩji 12. Machimura Nobutaka 13. Abe ShinzΩ 14. Niwa Yuya 15. Ozawa IchirΩ

District Hiroshima 6 Gifu 3 Okayama 3 Fukuoka 2 Fukuoka 8 Fukuoka 10 Ishikawa 2 HokkaidΩ 11 Hiroshima 4 HokkaidΩ 12 Gunma 1 HokkaidΩ 5 Yamaguchi 4 Ibaraki 6 Iwate 4

Party LDP LDP LDP LDP LDP LDP LDP LDP LDP LDP LDP LDP LDP LDP DPJ

Terms

Income, millions of yen

8 12 7 10 7 6 11 6 7 5 6 6 3 8 11

698.0 ($6.0 million) 480.9 ($4.1 million) 405.3 ($3.5 million) 379.1 ($3.3 million) 356.2 ($3.1 million) 338.7 ($2.9 million) 319.2 ($2.8 million) 304.8 ($2.6 million) 297.4 ($2.6 million) 291.1 ($2.5 million) 268.9 ($2.3 million) 267.2 ($2.3 million) 256.9 ($2.2 million) 252.6 ($2.2 million) 245.5 ($2.1 million)

Sources: KΩhΩ and KanpΩ, 2003. Note: Party affiliation and the number of previous terms reelected are coded prior to the results of the 2003 election.

bility, Figure 2.1 presents the average amount of income for all the DPJ and LDP members who have been reelected the same number of times. To recall, it is possible to run simultaneously in the SMD and PR tiers as a dual-listed candidate or to compete as a PR-only candidate. Because the specific institutional features of the mixed system are likely to shape politicians’ efforts to collect funds, the averages are further reported for dual-listed LDP and DPJ members and PR-only representatives in the LDP. Figure 2.1 captures the relatively weak position of DPJ dual-listed members in contrast to LDP dual-listed members at each rung of seniority. There are only four cohort groups of DPJ members with at least five members in each group; the most senior group peaks at four terms. In the LDP there are ten cohort groups. With the exception of most senior members, the income peaks near the fifth term of office for the LDP members. The greater need for funds at this stage reflects what is known about the LDP seniority system: generally politicians with four to six previous terms receive important posts and positions in the party and in government (Kohno 1997, 95). In the DPJ, members often receive important posts and positions earlier in their career because of the relative scarcity of veteran politicians. Candidate Quality and New Candidates in the LDP and DPJ

The concept of candidate quality highlights some of the different capabilities and constraints faced by incumbents and new candidates in the DPJ and

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Money and Candidate Quality Figure 2.1

29

Income by Number of Previous Terms in 2000 (LDP and DPJ)

Sources: KΩhΩ and KanpΩ, various years. Notes: The averages are calculated for all members who are reelected for the same number of terms. Only groups with five or more members are included. DPJ PR-only members are excluded, given their relative infrequency.

LDP in terms of fund-raising. To go beyond the distinction of incumbent and new candidate status, I evaluate other measures of candidate quality that extend my analysis to finer distinctions of quality and how they affect, if at all, the efforts of new candidates to raise money.11 Two aspects believed to tap the concept of quality in Japanese elections are previous occupation and whether the candidate has inherited the seat from a close relative. First, Japan has a powerful bureaucracy, and former bureaucrats frequently become politicians.12 Many LDP members can claim former ties to government ministries, such as the Ministry of Finance, Ministry of Construction, and the Ministry of International Trade and Industry. It was not surprising that many former bureaucrats-turned-politicians wield considerable power in the LDP. Miyazawa Kiichi, for example, was elected in 1953 after leaving the Ministry of Finance and went on to become prime minister. Many scholars have analyzed the importance of bureaucratic experience in fostering a career in politics. According to Yung Park’s (1986) research on the influence of the bureaucracy on Japanese politics, the former bureaucrats are found to possess considerable knowledge and expertise,

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which he argues is used to aid their political careers. Beyond Park’s more qualitative discussion, a recent empirical study suggests that former bureaucrats as a whole are successful in their ability to raise funds. In his analysis of year-based campaign disclosure reports for the 1996 election, Ueda Michio (2000) shows that former bureaucrats in the LDP were able to raise more income than other candidates. However, Ueda’s analysis is incomplete because it is based on the dataset collected for only winning politicians in the 1996 election. Like former bureaucrats, former prefectural assembly and Upper House members may have comparative advantages of their own, which serve them well on the campaign trail. In the case of former assembly members, many of the electoral boundaries of the mixed system correspond with the boundaries of local elective offices (Miyagawa 1996). This may ease the transition from an assembly seat to a bid for a Lower House seat. At the same time, Upper House members have national-election experience and an existing support base that makes them high-quality candidates. Finally, scholars also believe that hereditary Diet members are highquality candidates. Politicians frequently “inherit” the seat from a close relative who has retired or died. When a politician gets the seat in this way, he or she may also inherit the political assets of the predecessor, including money, support groups, and name recognition. To create a finer measure for analysis, a new candidate is classified as high-quality if he or she meets at least one of the following criteria: (1) has previous experience working in a national-level bureaucracy; (2) is a former prefectural assembly member; (3) is a former member of the Upper House; and (4) has “inherited” the seat from a close relative.13 This list does not exhaust all the possible attributes of the concept of quality, but it taps into many of the attributes mentioned in the literature. Additionally, the criteria are similar to those used in Ethan Scheiner’s (2006) analysis to predict the success of new candidates in the 2000 election.14 Multivariate Tests of Candidate Quality and Income

Preceding sections of this chapter provide support for the argument that various measures of candidate quality shape the ability of politicians from both the LDP and DPJ to raise money. Politicians’ efforts to raise funds can be linked to their efforts to win election or reelection and to such legacies as party structure. It is important, however, to control for other district-level factors that may shape this relationship. To shed further light on the variables that can potentially influence the ability of candidates to collect funds, I apply two models to Japanese politicians. The first model is tested on all members of the LDP and DPJ and incorporates a control for new candidate status. The second is applied to all

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31

new candidates in the LDP and DPJ using the additional measures of quality such as previous occupation. The dependent variable in both models is the amount of income collected per elector, which helps correct for different sizes of electorates across the single-member constituencies. The models are tested for politicians competing primarily in the SMD tier as dual-listed or SMD-only candidates. District-Level Measures Level of competition. First, a measure of competition is included because

the level of competition between the parties’ candidates should shape how much money candidates are able to raise. As Joseph Schlesinger (1985) argues, the greater the competition for seats, the more parties and candidates are likely to focus on their electoral survival. In competitive districts, politicians may face greater incentives to raise funds to avoid defeat by their competitors. In less competitive districts, politicians may have fewer incentives to raise money. The relationship, however, between the level of competition and income may be more complex. Many districts in Japan are uncompetitive because of the presence of high-quality incumbents who scare potential challengers away from entering the race. Donors and supporters often contribute large amounts of funds to these incumbents because they are expected to win the election; consequently, many districts may be uncompetitive yet feature well-funded incumbents. Although the level of competition is an important dynamic in Japan’s Lower House, scholars have been limited in their ability to measure it precisely. One approach is to calculate the closeness between the first-place and second-place candidates after the election results have been determined (Reed 1999). Even though this measure cannot be taken until after the election results are known, it should still reveal useful information about the expected relationship between the competitiveness of the district and the level of income.15 Number of candidates. The second measure is the number of candidates

competing in each district, which is related to the level of competition. More party-affiliated and independent candidates are likely to enter contests where the incumbent has retired or is vulnerable to defeat, which should make the district more competitive in the quest for more financial resources. Here the measure is created by counting the total number of candidates competing in each district above and beyond the LDP or DPJ member used in the model. Population density of district. The third district-level variable is a measure constructed using the percentage of the district that is densely populated.

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This is one avenue for understanding the extent that a district is urban (more densely populated) or rural (less densely populated).16 In Japan’s SNTV system, scholars believed that the use of money is greater in rural districts, particularly given the importance of the rural vote to the LDP. One expectation in the literature is that densely inhabited districts are negatively associated with the use of money (Cox and Thies 1998, 2000). In the mixed electoral system, LDP members may raise less money in densely populated districts because voters and financial supporters are more difficult to mobilize. Results for the LDP and DPJ

The first model is constructed using the income reported by incumbents and new candidates of the LDP and DPJ and is tested separately for the 2000 and 2003 elections.17 The main variables of theoretical interest are two measures that draw on candidate quality: new candidate status and the number of previous terms the politician has served. New candidates should be at a disadvantage against incumbents in raising funds; this measure is expected to be negative. Increasing seniority as measured through the number of previous terms should be positively associated with income. I also include a measure of party affiliation to identify LDP and DPJ members. To the extent that ruling-party status is consequential, the measure for LDP affiliation is expected to be positive. Table 2.4 presents the effects of the candidate- and district-level measures on income. As captured here, the variable for new candidate status is statistically significant and correlates negatively with income in both 2000 and 2003. This means that new candidates raised 42 to 89 yen less per elector than incumbents, which totals approximately 14.2 to 30.2 million yen ($122,000 to $285,000) for the average size of the electorate. The measure for the number of previous terms is positively signed and statistically significant. For each additional term of office, members earned 22 to 33 yen more per elector. In 2003, for example, a member with five previous terms of office should have raised 160 yen per elector or about 54.2 million yen ($467,000) for the entire electoral district. The results also confirm the financial prowess of LDP over DPJ members. In both election years, LDP members earned approximately 148 to 166 more yen per elector than DPJ members. For the measures that tap district-level characteristics, the level of competition is positively related to income in 2000 and 2003. LDP and DPJ members raised approximately 2 yen more per elector in less competitive districts.18 In contrast, the measure for the number of candidates in SMD races appears to be negatively correlated with LDP income in the 2000 election. Finally, the measure for the percentage of the district that is densely

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Money and Candidate Quality Table 2.4

Regressions of Quality on All Members’ Income

Independent Variables New candidate Number of previous terms LDP member Level of competition Number of candidates Densely inhabited district Constant N Adjusted R2

33

2000 Election

2003 Election

–89.23*** (26.29) 22.46*** (4.38) 165.57*** (21.36) 2.60** (1.21) –30.93*** (10.50) –0.41 (0.39) 248.34*** (48.16) 511 0.39

–42.18** (18.40) 33.04*** (3.34) 147.78*** (14.59) 2.54** (0.98) –1.90 (10.17) –0.52** (0.27) 97.47*** (36.53) 497 0.50

Sources: KΩhΩ and KanpΩ, various years. Notes: Estimates are ordinary least squares coefficients with standard errors in parentheses. Dependent variable: Annual income collected from party branch, kΩenkai, and fund agent for new candidates in the LDP or DPJ divided by the total number of electors in each constituency. These figures are for the current year (2000 or 2003) and do not include any balances from previous years. New candidate: Coded “1” if the candidate has never previously won election to the Lower House and “0” if otherwise. Politicians who won either an SMD or PR seat in the previous election are coded “0”; former incumbents and those competing solely in the PR tier in the current election are excluded from the analysis. Number of previous terms: Measured as the total number of times a politician has been elected to the Lower House prior to election year used in the model. LDP member: Whether the candidate is an LDP or a DPJ member. LDP is coded “1” and DPJ is coded “0.” Major incumbent opponent: Coded “1” if the candidate competed against an incumbent from either the LDP or DPJ or “0” if otherwise. Level of competition: The percentage of the district vote share for the main candidate is subtracted from the next strongest finisher. Larger values indicate less competitive dynamics. Number of candidates: The total number of members competing in the district beyond the main candidate. Densely inhabited district: The percentage of the district that is densely populated. * p.