This chapter is about change. The LDP's loss of its absolute majority in the Upper House in 1989 marked the dawn of a new era. This chapter covers the second and third periods identified in Chapter 3 – the period between the 1989 Upper House elections and the emergence of the non-LDP government and the period between the emergence of the non-LDP government and the 1996 Lower House elections. From the perspective of the structural logic approach, the second and the third periods share two similarities. First, in both periods, multiple political parties possessed veto power. Second, the electoral system remained the same MMD/SNTV system. This chapter demonstrates that, as a result of the emer-gence of multiple political parties with veto power and the persistence of a multimember district system, Japanese welfare politics during this period came to resemble welfare politics in northern Europe, as expected on the basis of the structural logic.

Three changes that bear on the Japanese welfare system can be identified here. First, the increase in the number of parliamentary veto players under the MMD/SNTV system meant that the core constituency groups of non-LDP parties gained a new foothold for securing policy favors. Second, the emergence of non-LDP parties as parliamentary veto players opened up new legislative possibilities for welfare-friendly bureaucrats. Social services and benefits for wage earners were now a genuine option. Third, the emergence of coalition governments, just as in European coalition governments, made it easier to raise taxes.