FOR-Asi-0025-Stock

Just six months have passed since the Democratic Party of Japan took power in Tokyo, upending a half-century of rule by the Liberal Democrats and ushering in what many hoped would be a new era in Japanese politics. Half a year later, the DPJ's promises of "hope" and "change" are starting to look like empty slogans.

Prime Minister Yukio Hatoyama bears much of the blame. He has presided over a huge spending spree, worsening the already-terrible fiscal deficit. There is no plan for economic reform to spur growth, despite an anemic 0.9% GDP expansion in the fourth quarter. Yet Mr. Hatoyama has plowed on with grandiose new promises, most notably to cut Japan's greenhouse-gas emissions by 25% from 1990 levels--a move that would increase energy costs and limit economic growth even further.

The DPJ's foreign-affairs management hasn't been much better. The Hatoyama government stoked an unnecessary dispute with its cornerstone security ally--the United States--over a 2006 agreement to move a U.S. Marine Corps base from an urban to a remote location in northern Okinawa. If the DPJ attempts to substitute another plan or fails to issue a decision about the base by its self-imposed May deadline, then ties will unquestionably worsen. On top of that, Mr. Hatoyama's call for a new East Asian Community that may exclude the U.S. has been widely panned by critics inside Japan and by Tokyo's democratic allies.

Then there are the ongoing scandals that have dogged the Hatoyama administration. Aides to both the prime minister and party Secretary General Ichiro Ozawa have been indicted in allegedly illegal fundraising schemes, leading to the arrest of both a Diet member and Mr. Ozawa's former secretary. Up north, four people, including three members of the Hokkaido Teachers' Union, were arrested for illegal donations to a second-term DPJ legislator. For a party that ran on cleaning up Japanese politics, the DPJ's six-month record in power has served to erase the ethical distinction between the parties.

For all these reasons, the DPJ has suffered a momentous slide in its popularity. Newspaper polls now find less than a 10-point gap between Mr. Hatoyama's party and the rudderless LDP in advance of upcoming elections for the upper house of parliament. Luckily for Mr. Hatoyama, there's little chance of the LDP returning to power anytime soon, but that doesn't mean the DPJ shouldn't be alarmed. Given its underperformance in its crucial first months, the DPJ will face increasing scrutiny from a public tired of unresponsive and incapable politicians.

Japan can't afford this kind of economic and political stagnation. The country's aging population, shrinking permanent employment opportunities and creeping crime rates point to an increasing national malaise--at a time when Japan's competitors, in the form of South Korea and China, are powering ahead.

In centuries past, Japanese malaise was often followed by a traumatic reordering of the political and social system. Today however, there are no discernible domestic trends that might point to such a renaissance. Many Japanese hung their hats on last year's election, but the DPJ's performance has scotched all hope. The real danger in Mr. Hatoyama's inability to change Japan is that citizens will further lose faith in the future, no longer believing there is really any way out of their current predicament. That will make governing harder.

Why does this all matter? Despite the obvious importance of ending the stagnation of the world's second-largest economy and improving the lives and futures of 125 million people, Japan in some ways is still a canary in the coal mine of modernization. It has served as an economic model for much of Asia, has steadily accepted a greater burden providing public goods both regionally and globally, and has developed a stable political system in a region still wracked by electoral uncertainties. The struggle to consolidate democratic, free-market systems is far from over in Asia, and the future of the world's most dynamic and populous region will be far more uncertain if liberal states are seen as incapable of solving their problems and providing for their people.

The onus is on Mr. Hatoyama, and all Japan's politicians, to prove that the four-decade run after World War II was no fluke, and that Japan can find the answers to maintaining a vigorous society and economy. If the prime minister doesn't start delivering on his promises soon, he is courting, at best, irrelevance, or at worst, disaster.

Michael Auslin is a resident scholar at AEI.