Economic Crises and Policy Regimes
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Economic Crises and Policy Regimes

The Dynamics of Policy Innovation and Paradigmatic Change

Edited by Hideko Magara

In this innovative book, Hideko Magara brings together an expert team to explore both the possibilities and difficulties of transitioning from a neoliberal policy regime to an alternative regime through drastic policy innovations. The authors argue that, for more than two decades, citizens in developed countries have witnessed massive job losses, lowered wages, slow economic growth and widening inequality under a neoliberal policy regime that has placed heavy constraints on policy choices.
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Chapter 9: In search of a new policy regime: the record of Democratic Party of Japan-led governments

Masanobu Ido


Amidst the deepening financial crisis that began with the Lehman Brothers' collapse of 2008, the Democratic Party of Japan (DPJ) won a landslide victory in the 2009 general election, riding a wave of public anger over a widening economic gap that had resulted from excessive neoliberalism in the Koizumi period. The establishment of the new DPJ government was interpreted as putting an end to the almost uninterrupted postwar rule of the Liberal Democratic Party (LDP) and heralding a progressive politics that would achieve more egalitarian growth. Yet, as concern grew over Japan's more than 200 per cent public debt relative to gross domestic product (GDP) against the backdrop of the European sovereign debt crisis, the DPJ-led government switched to a policy of fiscal consolidation while abandoning its social democratic ideals. With the conclusion of an accord between the DPJ and opposition parties, Prime Minister Yoshihiko Noda finally saw a consumption tax hike bill passed in August 2012, thus completing a U-turn in economic policy. Disappointed by this betrayal, Japanese voters punished the DPJ with a resounding defeat in the general election of December 2012 and returned the LDP to power. Why did the DPJ turn its back on its radical campaign pledges and pursue more conservative policies - an act of political suicide? To investigate this puzzle, this chapter adopts the concept of policy regime recently proposed by Przeworski (2001, 2010).

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