Today’s voters obtain their information through the internet and are no longer deceived by the biased information filtered through the “clouded eyes” of the old media. Without naming specific names, political parties that are heavily influenced by specific interest groups and fail to face ordinary voters head-on are destined for a steady decline.
The Liberal Democratic Party (LDP), which elected Sanae Takaichi as its new president, managed to hold its ground at the very last moment. While the LDP is supported by various industry groups and religious organizations, it has previously been far too influenced by the broad “Austerity Faction”—namely, government ministries and civil servants, the old media and the biased economists/pundits they support, and organizations like Keizai Doyukai (Japan Association of Corporate Executives). President Takaichi will likely keep these forces at arm’s length and engage in direct dialogue with ordinary voters via social media.
On the other hand, the Constitutional Democratic Party (CDP) and the Democratic Party for the People (DPFP), both backed by RENGO (Japanese Trade Union Confederation), the umbrella organization for labor unions, find themselves at a critical crossroads. It is not widely known, but RENGO is an organization with an extreme bias toward austerity. For instance, in a statement by its General Secretary on June 13, 2025, they remarked:
“The achievement of a primary balance surplus, which was targeted for this year, has once again been postponed. To ensure confidence in the nation’s finances, stable fiscal management is essential to address current challenges within limited resources while preparing for emergencies. To achieve a surplus as soon as possible, an independent fiscal institution should be established to monitor and evaluate government fiscal plans, and we should begin strengthening fiscal discipline and constantly reviewing expenditure structures.”
Primary balance (PB) is utterly meaningless; as far as I am concerned, it is nothing more than “just a number displayed on a screen.” While there is some technical economic difference between PB and the overall fiscal balance, learning such a distinction is useless. As I have pointed out repeatedly, the only balance that truly matters is the current account balance, which continues to maintain a significant surplus.
Setting those technical details aside, why is RENGO so obsessed with fiscal reconstruction? Is it because powerful member unions like the Japan Teachers’ Union (Nikkyoso) and the All-Japan Prefectural and Municipal Workers’ Union (Jichiro) fear that a failing fiscal balance will lead to downward pressure on their wages? If so, that is incredibly foolish logic. Regardless of the fiscal balance, if private-sector wages do not rise, then pay hikes for civil servants cannot be justified. What matters is increasing the wages of the private-sector unions that constitute the overwhelming majority.
So, does achieving a primary balance surplus lead to higher private-sector wages? What is the mechanism? Frankly, RENGO’s view on the economy and fiscal policy is nonsensical and incoherent. Aiming for a PB surplus worsens the economy and leads to lower wages. Labor unions, by their very nature, should not be playing with such technical jargon; instead, they should be shouting—even unreasonably—to “cut into the profits of shareholders and management to raise wages, and tell the government not to interfere!” What is the point of forgetting their true duty and echoing the same claims as the austerity faction?
The fiscal outlook of Yoshihiko Noda, who as Prime Minister led two consumption tax hikes, is virtually identical to that of RENGO. If the CDP believes it is appropriate to have this individual as their leader, the party has no future. Furthermore, as long as RENGO clearly does not support fiscal expansion, the DPFP must choose: either cut ties with RENGO or encourage a split within the labor unions, similar to the historical divide between Sohyo and Domei. Otherwise, I believe that party, too, has no future.
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