How Japan's frugality screwed them- see also how employers

[Thickasabrick]

screwed their employees in Japan. We cannot let this happen here:

February 22, 2009
When Consumers Cut Back: A Lesson From Japan
By HIROKO TABUCHI

TOKYO — As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect.

The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.

Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.

The Takigasaki family in the Tokyo suburb of Nakano goes further to save a yen or two. Although the family has a comfortable nest egg, Hiroko Takigasaki carefully rations her vegetables. When she goes through too many in a given week, she reverts to her cost-saving standby: cabbage stew.

It goes on to talk about how Japanese employers started cutting benefit and wages to compete with Korea so now they just hire temps with no benefits. It's like the article doesn't draw the parallel between sucky wages and consumers spending less.

Read more:

http://www.nytimes.com/2009/02/22/business/worldbusiness/22japan.html?ref=business

[Jackpine Radical]

1. We can't let it happen here?

My impression is that it HAS happened here.

[BlooInBloo]

2. Oh really. What's Japan's savings rate for the last 10 years? What's the US' ?

(facepalm)

[Jackpine Radical]

6. I think there is a sudden wave of frugality here. Hell, I'm part of it.

I wasnt thinking of that, though, so much as the screwed-by-the-employers part.

Although, in many ways, that's a much bigger deal in Japan because employers were traditionally very loyal to their employees, providing them with pretty much guaranteed lifetime employment and a decent retirement, to the extent that private employers carried the major responsibility for their equivalent of a SocSec system.

[FreakinDJ]

7. USA personal saving rate is the highest

Were talking 401Ks

[hay rick]

12. I don't think so.

link: http://perotcharts.com/2008/05/household-saving-rates-for-selected-countries/

A lot of money was put into 401Ks at the same time as consumption was funded by borrowing. The important number is net savings- and our numbers suck.

[Thickasabrick]

4. Not yet, we still actually have unions and some companies that

pay decent wages. It sounds like Japan's employers were so desperate to compete with Korea they screwed their own people. No wonder these people don't buy anything.

[exboyfil]

3. Frugality is good - saving as a nation is even better

Japan does have two major problems though. The first was there banking system which was structured in such a way that a large portion of capital (from Japanese families whose only way to save was through these banks) was plowed into less than economically sensible ventures (mostly in the 80s and 90s). When their crash happened, the government created zombie banks (does this sound familar). They were just starting to shake this off when the Great Crash of 2008 happened.

Their other big problem is demographics and this is what will ultimately kill their country unless something is done. They are our test case.

[Thickasabrick]

5. I think frugality is good but doing your laundry using bath water is

too much for me. Even the wealthy do that and that is just gross.

It should be interesting to see how they handle their old people problem....and you are right - this is like looking in a futuristic mirror.

[FreakinDJ]

8. Japan embraced "Trickle Down Theory" during the late 80s

Glad to see how well it has worked out for them

[FarCenter]

9. Japan has to be frugal

They have 128 million Japanese in a country the size of California, which by comparison has 37 million people.

They have no significant mineral resources. Only 12% of the land is arable.

They have to compete in world trade for basics such as food, energy, metals, etc.

[TheKentuckian]

10. The only things Reaganomics encourage are deficits, the reverse Robin Hood effect, and recessions

Being scared to invest in their own people in a serious way in combonation with toxic trickle down "free market" malarky permanently crippled Japan. Let's not make the same errors.

[Kansas Wyatt]

11. The time has come to CUT & GUT the upper class.

They had their thirty years of power, prestige, privilege, and gluttonous luxuries. Their free ride must come to an end, if this country is to survive. The needs of the many outweigh the needs of the few.

They will still live very comfortable lives that the rest of us could only dream about, but their squandering wholesale waste must come to an end.