Japan: the strategy of decline

Forget the hard working Japanese salary man: since the early 1990s, the Japanese have  drastically reduced their rhythm. Tokyo University economist Fumio Hayashi has shown that the main reason behind Japan stagnation has been the decrease in the quantity of work. Since 1988, the government has led the way by closing public administrations on Saturday. The banks followed. From 1988 to 1993, the legal working time went down from 44 to 40 hours a week: a ten  percent decline. This has been  more than enough to bring the  former Japanese « miracle » to its knees. The production technology and industrial productivity being the same  in Japan, in Europe and  in the United States, Japan has lost ground, in direct relation with its decrease in working hours. In the service sector, the downturn has been even worse while it is heavily regulated and partially closed to foreign competition. In the retail business, which employs a lot of unskilled workers – the so called « pop and mom » shops - , the productivity in Japan is now inferior by 25% compared to Western Europe.

 

Starting from this quantitative analysis of the Japanese stagnation -a.k.a. « the lost decade »-, Prime Minister Juichiro Koizumi, from 2000 to 2004, with the help of Tokyo University economist Heizo Takenaka, as Finance Minister, went for privatization and deregulation. This bold move towards a free market solution had been strongly opposed by the bureaucracy. The powerful Japanese bureaucrats keep the nostalgia of the 1960’s model when government with its business pals nurtured the Japanese miracle: these bureaucrats feign to ignore that Japan is now in a  competition with many other Asian and non Asian countries.

 

Moreover, the public opinion never supported the Koizumi’s policy which was perceived, and still is, as a source of inequality. This  accusation happens to be a political canard : in fact, real estate speculation and not privatization has been the real source of undeserved wealth in Japan. Nonetheless, the Democratic party has been able to stick the accusation to free market policies. The recent shift towards the untested Democratic party led by Yukio Hatoyama, has thus  translated the popular wish not to follow the American free market pattern. When Yukio Hatoyama declares that Growth is important but Happiness comes first, he does reflect the mood of many Japanese even when it does not make any clear economic sense.

 

Assuming that Hayashi and Takenaka are right on the causes of the stagnation, one has to ask if the Japanese want or not, to work more in order to catch up with the United States and to lead Asia development? Maybe, they do not: maybe, stagnation is a tacit collective choice made by a majority of the Japanese people?

 

Nearly half of the Japanese population is retired or nearing retiring age. Those graying Japanese did work very hard to reach a high level of comfort:  thanks to them, in spite of the « Lost decade », Japanese income is still above Europe. Also, the level of unemployment is low compared to the Western world: the unproductive distribution sector absorbs the young who cannot find a better job. Stagnating Japan has thus remained a peaceful and rather conservative society.

 

A higher growth rate would require less golf breaks for the salary man and a significant immigration in a nation which is not accustomed to foreign intrusion, nor different cultural habits. Who is ready for such a cure? Most Japanese, mostly among the old generation, happen to be quite satisfied with the kind of society and well being they have reached. They perceive the American and European society as too much obsessed with money and material drive: these traditional Japanese seem ready for some stagnation if this is the price to pay, to remain truly Japanese. Because he understands this spirit of the nation, Hatoyama won the recent election. His new Age discourse, which looks weird  from the Western perspective, is in harmony with the Japanese way: this is a country where thousands of cult leaders offer ways to Happiness, a mishmash of New Age and Zen Buddhism.

 

How long is this Stagnation with Harmony sustainable? The Japanese high tech industry is still competitive and Japan remains the second global export country. It is still a very innovative economy, which registers, each year, more new patents than all European countries together, second only to the United States and eons ahead of China and India. 150 millions Japanese still produce much more than 2,5 billions Chinese and Indians together.

 

In the long run however, ten years maybe, Japan could lose its status vis-à-vis the rest of Asia. Today, already, the stagnation impacts the young generation: it becomes hard to find a job, not to mention a life-long employment in the leading global companies of Japan. The teenagers know that they will have less opportunities than their parents had: how they will pay for their parent’s pension and old age healthcare in an enigma.

 

Most troubling is the absence of an open debate on these matters in Japan. This is kind of hush-hush society, where everyone is supposed to guess what is going on. Questions are not to be asked, straightforward answers would be rude. Media are careful not to provoke any social divides. Foreigners are welcome to make comments but their advice will usually not be taken into consideration.

Comments

[Rédigé par : sophie]

thank you for this incisive and off-the beaten-track analysis. will spread your interesting word in tokyo.
bien a vous.
sophie

[Rédigé par : sakuragi]

"A higher growth rate would require less golf breaks for the salary man and a significant immigration in a nation"

Merci pour ce billet sur la situation Japonaise.

Je soulève ce point plus haut :
L'immigration est la voie qu'à choisie l'europe, je ne sais pas si c'est vraiment efficace...
D'une part ca va tuer la Civilisation (je parle de l'islamisation la, encore..) , ce que je ne souhaite pas aux japonais qui ont une culture enorme, tant ancestrale que moderne.

Et d'autres part l'un des effets secondaire avec l'immigration est que les postes "à basse qualification" sont donc logiquement occupés par les migrants, mais les japonais refuseront du meme coup de les occuper.
Générant ainsi du meme coup du chomage car une partie de la population ambitionne d'occuper un niveau de poste pour lesquelles elle n'a pas de qualification.

Voila, et il me semble qu'en temps de mondialisation/délocalisation, les pays occidentaux n'ont plus vraiment besoin d'ouvriers, si ?

Mais vous parliez peut-être d'immigration choisie ?

[Rédigé par : Alain Soler]

Bon papier de GS dans le monde aujourd'hui:

http://www.lemonde.fr/opinions/article/2009/09/09/l-economie-ne-ment-pas-mais-ne-predit-pas-l-avenir-par-guy-sorman_1237990_3232.html

[Rédigé par : Quimboiseur]

"The teenagers know that they will have less opportunities than their parents "

Comment s'est possible avec une forte population grandissante de retraités...

Il va bien falloir des jeunes pour payer les charges de ces retraités. Et les départs massifs à la retraite vont laisser des places vaccantes pour de nombreux jeunes.

[Rédigé par : D.J]

Le World forum économique (WEF)classe le Japon au 8ème rang des pays les plus compétitifs.Le Japon gagne un rang par-à-port à 2008.

La Suisse est première devant les USA.La Chine 29ème.

http://www.24heures.ch/actu/economie/suisse-competitive-etats-unis-2009-09-08

D.J

[Rédigé par : Kim Jong Ilien]

Israël le peuple élu n' est même pas dans le top 10, étonnant.Pourtant , Israël est pratiquement le seul pays riche (30000 $ de pib/hab) avec une croissance de 5 % depuis des années, tiré par l' industrie de la défense et de la sécurité( voir la stratégie du choc de Naomie Klein).Israël à ce rythme deviendra parmi les pays les plus riches de la planète et dépassera Dubaï.