Mr. More-Of-The-Same

Consider the situation in Tokyo today. Japan's economy is teetering on the brink of recession. Consumer confidence is hitting lows not seen in years. The population is graying and shrinking. And next-door China is on a tear.

Given these challenges, you might expect Taro Aso, 68—who was named Japan's prime minister last week after the shocking resignation of Yasuo Fukuda—to bring a clear economic agenda, a sound international strategy and a team that put competence first.

If so, you'd be wrong on all counts. On the economy, Aso has said little and backed away from government targets to balance the budget. Several members of his cabinet are hardline conservatives with revisionist views on Japan's wartime record. And his team is heavy on party insiders—just the sort of people who have blocked change in the past.

There is a certain logic behind this. Though he just took office, Aso is likely to face a constitutionally mandated election within months. The opposition Democratic Party of Japan (DPJ), which already controls the upper house of Parliament, promises to put up a good fight. Unless Aso can win over key constituencies fast, he could soon be ousted.

Hence the pandering. Koji Shimamoto, chief strategist at BNP Paribas in Tokyo, says that Aso's economic proposals, such as financial support for small businesses and fishermen, are meant "to appeal to traditional supporters of the LDP." Observers fear that means a return to the 1990s, when the LDP lavished government money on public works in an attempt to pull the country out of its doldrums.

Of course, such an approach didn't work then and only saddled Japan with massive public debt. Pointing to that debt (now around 170 percent of GDP), some analysts argue Aso won't be able to dole out much pork even if he wants to. But so far, he has yet to signal anything different. Pretty much all Aso has proposed is a series of tax cuts for businesses to stimulate the economy. That's a notably small-bore solution given the magnitude of Japan's challenges, notes Tetsuro Okada, an economist at The Japan Research Institute, and unlikely to do much good in the long term. Okada says what Japan really needs are measures such as free-trade agreements and agricultural reform—things to which Aso has given short shrift.