Germany and Japan

At the end of the Cold War it was widely predicted that Germany and Japan would take pre-eminent positions in the new world order as the U.S. declined. The two countries, of course, promptly fell flat on their faces while the U.S. prospered. Lately, however, they appear to be headed in distinctly different directions.

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The Japanese, it appears, have finally decided that enough is enough and that something has got to give:

A government bureaucrat, Kazushige Nobutani, acknowledged that he might have been signing his own pink slip when he joined the avalanche of Japanese voters who backed Prime Minister Junichiro Koizumi in Sunday's vote. But Nobutani, 39, said he saw no other choice.

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"Koizumi wants smaller government in Japan, and I realize my own job may at some point be in danger," said Nobutani, who works for the Economy Ministry. "But Koizumi is a strong leader determined to reform Japan, and the people are behind him. I don't think we have another option. It needs to be done, and Koizumi is the only one who can do it."

In Germany, meanwhile, despite their continuing economic difficulties the people appear scared of real change:

One week ahead of balloting, polls show Schroeder's Social Democrats closing in on the conservative Christian Democratic Union, led by Angela Merkel. It's so close that Merkel's party may fail to get a clear majority with her preferred coalition partners, the Free Democrats.

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...A full 36 percent of Germans believe a bipartisan grand coalition would be best for the country, while only 29 percent support a government of the Christian Democrats and the Free Democrats, according to a survey by Infratest-dimap.

The Free Democrats are the closest thing Germany has to a true free-market party, while the center-right CDU probably have more in common with the Democratic Party than Republicans. For Germans, however, even this is too much.

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In the race to see which country will turn itself around the smart money is on Japan.

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Update: Related thoughts here from Olaf Gersemann, international news editor of the Financial Times Deutschland:

To put it bluntly: Most French, German, and Italian voters simply refuse to accept the necessity of a Thatcher/ Reagan-style economic revolution. Things will have to get even worse before many Europeans realize the depth of their countries’ stagnation.

Read the whole thing but remember that while it may be tempting to be smug about Europe's stagnation -- myself included -- that it isn't good for anyone. Gersemann's book, by the way, is a fantastic read.