Inside The Outsider

The streets of Tokyo are beginning to stink like New York did when I lived there in the 1980s." That's just about the worst insult you could deliver in Japan, but Yasunori Fukugawa, 47, a professor of urban planning, isn't the only one who sniffs trouble. In the shadows of Tokyo's futuristic skyscrapers, there are tent cities with hundreds of permanently homeless men. Mother Teresa's nuns have set up a soup kitchen in the second richest nation on Earth. The economy is shrinking, and the official unemployment rate has risen to 5%, highest in a generation. In recent weeks, the blue-chip stars of the country's manufacturing sector--the makers of computer chips, TVs and PCs, such as Toshiba, Fujitsu and NEC--have announced that they will shed tens of thousands of jobs.

Amid this gloom, the Japanese are placing their hopes on a Prime Minister who comes across like a rock star. Junichiro Koizumi is a 59-year-old career foot soldier of the Liberal Democratic Party, which, except for one brief period, has ruled Japan for the past 46 years. But Koizumi has shrewdly positioned himself as an outsider. "If my party tries to destroy my reforms, if they try to stand in my way, I won't hesitate to destroy the party itself," he said repeatedly while he was campaigning for parliamentary candidates this summer.

Koizumi's program is revolutionary. It amounts to a systematic unraveling of Japan's political and financial institutions. To help ease the burden of the government's debt, estimated to be as high as $5.5 trillion by some economists, he has proposed cutting the budget 10% and shifting spending from public-works projects to education, job training and environmental cleanup. Koizumi has set a three-year target for settling the balance sheets of Japan's heavily indebted banks. He has appointed a free-wheeling Cabinet that is younger, more female and includes more outsiders than any seen before. Most stunning of all, Koizumi has made a promise that he will have no trouble keeping: there's going to be a lot more economic pain before things get better. Such straight talk is endearing. "I wish he could be my father," coos Yoshie Hishinima, 30. "My own is nowhere near as cool."

Such sentiments are common. Every word Koizumi speaks is golden. Whether celebrating with a champion sumo wrestler, tossing a baseball back and forth with President Bush, or commiserating with leprosy victims mistreated for decades by the government, Koizumi has touched a downcast nation. A record label has released a CD of his favorite Elvis hits. There's a mint-flavored Koizumi chewing gum. Last week stores started selling a coffee-table book with snapshots of Koizumi in a bathrobe, Koizumi reading, Koizumi playing baseball, Koizumi eating noodles. "The whole country is depressed," says Masaaki Nagamoto, 45, a law clerk shopping for Koizumi kitsch one recent afternoon. "All our faith is in Koizumi."

That faith is being placed in a decidedly unusual man. At one level, the Prime Minister's appeal is easy to fathom. "He wants to destroy the things people hate the most," says Heizo Takenaka, an economics professor who last spring joined the Cabinet. At the top of that list: the crusty political barons and their backroom deals, the endless paving of highways that go nowhere, schools that stress conformity over creativity. Yet in any time but the present, Koizumi would never have been trusted. He has a reputation as a lone wolf, a bit of an eccentric. In the past, that would have doomed him in a nation where mavericks traditionally have been mistrusted.

"He was always murenai," observes political commentator Nobuhiko Shima, "outside the group. He always went his own way. Now, in Japan, outsiders are respected. It's a big change." Entrepreneurial tycoon Masayoshi Son is Korean; Nissan fix-it man Carlos Ghosn is Brazilian. Both have successfully challenged the traditional rules of Japanese business. "It is the time for the outsiders in Japan," says Shima.

Yet not by even the loosest definition is the Prime Minister a true outsider. He was born into a political family. His grandfather Matajiro was a construction-crew boss with a full-body dragon tattoo. He lived in Yokosuka, a town on Tokyo Bay. Matajiro's florid oratory and populism won him numerous terms in Parliament. He had no sons, but a protege insinuated himself into the family by marrying the old man's daughter. That man was Junya, the father of Koizumi, and he succeeded Matajiro in Parliament. When he died, he left clear instructions for his eldest son: "Certain victory, Junichiro-kun," he wrote.

In fact, Koizumi knew early defeat. He lost his first election in 1969, an embarrassing failure to fill his father's seat. The future Prime Minister was sent off to work for an L.D.P. heavyweight, Takeo Fukuda. Koizumi answered the phone, ran errands and dusted Fukuda's shoes. He finally took his father's place in 1972, but the years with Fukuda were well spent. For an L.D.P. baron, Fukuda was famously incorruptible, and Koizumi watched his mentor lose power to factions of the party that had perfected pork-barrel politics. Koizumi today rants about the waste in government spending largely because he watched his enemies in the biggest L.D.P. faction shove fat contracts to construction bosses who delivered votes and campaign war chests in return.