The Pauperization Of Japan
Friday, September 28, 2012 at 5:50PM “Pauperization,” the word, became infamous when three executives of huge consumer products companies voiced it as the new challenge in Europe. To market their products successfully, they changed their commercial strategies and applied what worked in poor countries [The “Pauperization of Europe"]. In Japan, a similar process has hounded the economy, but for much longer. And nothing shows this better than the plight of the ubiquitous but hapless “salaryman.”
He is a cultural phenomenon. He enters the formidable corporate hierarchy upon graduation and struggles within it till retirement. Most of the time, the career trajectory flattens sooner or later. Often enough the aging salaryman is shuffled aside to a “window job” where he might not even have the tools to work, such as a phone.
His life is defined by commutes in packed trains and long hours at work. After work, at restaurants and bars, the informal part of work begins with clients or coworkers to hash out inter-office issues, price differences, design problems, or product failures under the influence of alcohol—the official excuse to be direct in a culture that prizes vagueness.
In return for his labors, the salaryman hands his paycheck to his wife. She manages the household budget, pays the bills, buys what is needed, and makes investment decisions. Stories abound of the Japanese housewife who blew the couple’s life savings on leveraged investments that no one understood. And she’s known for her impeccably wrong timing [The Japanese Are Dumping Their Gold].
She also gives her husband a monthly allowance, kozukai, to buy lunch, dinner, drinks, etc., though regular visits to “soapland,” due to their higher costs, would have to be covered by special company cash bonuses. Now a lot of these structures are loosening up, and lifetime employment is no longer the ground rule, nor is marriage, but for those who end up married, especially if the wife stays at home, the allowance still applies.
In 1979, Shinsei Bank started one of the most insightful polls into consumer spending habits, or rather into male consumer spending ability—the Salaryman Pocket Money Survey. Back then, the average salaryman’s allowance was ¥47,175 ($590) per month. By 1990, the peak of the bubble when money grew on trees, wives indulged their husbands with an allowance of ¥77,725 ($971) per month. Then it crashed. By 2004, it landed on the ¥40,000 mark.
This year? ¥39,756.
And those with kids receive ¥15,000 less than those without kids.
The bursting of the Japanese bubble, now in its third decade, has ravaged salaries, bonuses, household budgets, and thus allowances—and spending. The zero-interest-rate policy that the Bank of Japan has perfected, extensive quantitative easing, and two decades of stimulus budgets that have left Japan saddled with the worst debt-to-GDP ratio in the world ... all conspired against the hapless salaryman. He works harder and longer than ever before, for less pay, and even his lunch money is getting cut.
In 1992, the average salaryman spent ¥746 ($9.32) on lunch; this year, ¥510 ($6.38). Back then, when everybody was still assuming that this was just a temporary lull in the excitement, the average salaryman took an almost leisurely 27.6 minutes to eat lunch; this year, he inhaled it in 19.6 minutes. After-work drinking took the biggest hit: in 2001, the average salaryman forked over ¥6,160 ($77) when he went out to drink. That’s a serious amount of beer. Hence the image of a midnight train stuffed with drunken and barfing guys. This year, he spent only ¥2,860 ($35) per drinking excursion.
The beer industry caught the brunt of it. Beer shipments, a closely watched index based on data from the five major brewers, dropped by 3.7% in 2011, the seventh straight year of declines. Only 442.39 million cases were shipped, the lowest EVER in recorded Japanese beer history. But this August, a miracle occurred. For the first time in years, there was an uptick in beer shipments for the month of 2.8%. Where there is beer, there is hope.
Or maybe not. Eating out got slammed. Again. In 2010, 22.6% of the salarymen said they didn’t eat out at all; in 2011, 35.8% weren’t eating out; and this year, 37.9%. If this trend keeps going, it will destroy the core of Japanese social life. (But those are the lucky ones. The number of welfare recipients set a new record: 2.115 million individuals and 1.543 million households, according to the Ministry of Health, Labor, and Welfare.)
This has got to be the icing on the Japanese cake. The website of the Japanese Ministry of Finance, more specifically the FAQ page on government bonds, has been catapulted to stardom on Facebook and Twitter. It posted the question: “In case Japan becomes insolvent, what will happen to government bonds?” Incredibly, it answers with a terse action plan for when the Big S hits the fan. Read.... Japanese Ministry of Finance To Japanese Bondholders: You’re Screwed!
And here is my book about Japan. It all started in France with a Japanese girl—a “funny as hell nonfiction book about wanderlust and traveling abroad,” a reader tweeted. Read the first few chapters for free.... BIG LIKE: CASCADE INTO AN ODYSSEY, at Amazon.
Reader Comments (4)
Second, beer shipments have dropped like a stone, but sales of happoshu, an imitation form of beer that avoids the special duties slapped on beer sales, have soared. The first happoshu were nasty, saccharine concoctions, but the brewers are getting better at their game. I particularly recommend Malt & Hops happoshu.
So yes, it's a lost generation, but not as lost as it seems at first blush.
To your first point: for the Japanese, who get paid in yen and spend yen, exchange rates don't matter and have no impact. I added the dollar values simply to give readers an idea of the magnitudes. Also, since 1990, the dollar has lost over 50% of its purchasing power in the US due to inflation. So that makes the drop expressed in dollars much worse. But again, it doesn't matter to the Japanese, who earn yen and spend yen.
Well, the difficult situation outlined here has not yet taken into account the calamity of Fukushima Daiichi NPP disaster, the ceaseless Fukushima radiation....
As highlighted by George Washington recently "Fukushima Radiation: Japan Irradiates the West Coast of North America" (washingtonsblog.com, crossposted at ZH as well).... Fukushima … the gift that keeps on giving.
Further, there's an investigative story by Joseph Trento at National Security News Service explaining why the Fukushima radiation problem is gonna be so severe and why there were so many secrecies and confusing stories covering the disaster.
"How Japan ended up in this nuclear nightmare is a subject the National Security News Service has been investigating since 1991. We learned that Japan had a DUAL USE nuclear program. The public program was to develop and provide unlimited energy for the country. But there was also a secret component, an undeclared nuclear weapons program that would allow Japan to amass enough nuclear material and technology to become a major nuclear power on short notice. That secret effort was hidden in a nuclear power program that by March 11, 2011– the day the earthquake and tsunami overwhelmed the Fukushima Daiichi Nuclear Plant – had amassed 70 metric tons of plutonium."
Full story: http://bit.ly/O2OzoL
FUKUSHIMA DIARY is also a good source to keep track upon this ongoing problem
http://fukushima-diary.com/
In short, to fully grasp the Japan's underlying problems TODAY, one should take regard on the Fukushima radiation issues.