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  • Summer Tangent: DailyFinance.com on Japan’s generation-long economic stagnation leading to a lost generation of youth

    Posted by Dr. ARUDOU, Debito on August 12th, 2010

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    Hi Blog.  Yet another Summer Tangent linked with yesterday’s post on Amakudari foiling reforms.  Here we have a reporter connecting the dots of Japan’s economic decline with more than just a whiff of Schadenfreude:  Holding up Japan as a laboratory experiment example of a society going down the tubes.  Well, points taken, especially about the sense of “Why bother?” for workers in a deflationary economy, but I’m not sure there are lessons that really apply anywhere else but here (and as a nitpick:  I don’t see “grass-eating men” as people who lack workplace competitiveness:  to me it’s more a fashion statement for men who have been brought up in a society where the ideal of beauty has long been far more feminine than masculine).  But anyway, food for thought.  Comments?  Debito

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    Japan’s Economic Stagnation Is Creating a Nation of Lost Youths

    DailyFinance.com By CHARLES HUGH SMITH
    Posted 7:00 AM 08/06/10, Courtesy of CJ

    http://www.dailyfinance.com/story/careers/japans-economic-stagnation-is-creating-a-nation-of-lost-youths/19580780/

    What happens to a generation of young people when:

    • They are told to work hard and go to college, yet after graduating they find few permanent job opportunities?
    • Many of the jobs that are available are part-time, temporary or contract labor?
    • These insecure jobs pay one-third of what their fathers earned?
    • The low pay makes living at home the only viable option?
    • Poor economic conditions persist for 10, 15 and 20 years in a row?

    For an answer, turn to Japan. The world’s second-largest economy has stagnated in just this fashion for almost 20 years, and the consequences for the “lost generations” that have come of age in the “lost decades” have been dire. In many ways, Japan’s social conventions are fraying under the relentless pressure of an economy in seemingly permanent decline.

    While the world sees Japan as the home of consumer technology juggernauts such as Sony and Toshiba and high-tech “bullet trains” (shinkansen), beneath the bright lights of Tokyo and the evident wealth generated by decades of hard work and Japan Inc.’s massive global export machine lies a different reality: increasing poverty and decreasing opportunity for the nation’s youth.

    Suddenly, It’s Haves and Have Nots

    The gap between extremes of income at the top and bottom of society — measured by the Gini coefficient — has been growing in Japan for years. To the surprise of many outsiders, once-egalitarian Japan is becoming a nation of haves and have-nots.

    The media in Japan have popularized the phrase “kakusa shakai,” literally meaning “gap society.” As the elite slice prospers and younger workers are increasingly marginalized, the media has focused on the shrinking middle class. For example, a best-selling book offers tips on how to get by on an annual income of less than 3 million yen ($34,800). Two million yen ($23,000) has become the de-facto poverty line for millions of Japanese, especially outside high-cost Tokyo.

    More than one-third of the workforce is part-time as companies have shed the famed Japanese lifetime employment system, nudged along by government legislation that abolished restrictions on flexible hiring a few years ago. Temp agencies have expanded to fill the need for contract jobs as permanent job opportunities have dwindled.

    Many fear that as the generation of salaried baby boomers dies out, the country’s economic slide might accelerate. Japan’s share of the global economy has fallen below 10% from a peak of 18% in 1994. Were this decline to continue, income disparities would widen and threaten to pull this once-stable society apart.

    Downsized Expectations, Opting Out

    The Japanese term ”freeter” is a hybrid word that originated in the late 1980s, just as Japan’s property and stock market bubbles reached their zenith. It combines the English ”free” and the German ”arbeiter,” or worker, and describes a lifestyle that’s radically different from the buttoned-down rigidity of the permanent-employment economy: freedom to move between jobs. This absence of loyalty to a company is totally alien to previous generations of driven Japanese “salarymen” who were expected to uncomplainingly turn in 70-hour work weeks at the same company for decades, all in exchange for lifetime employment.

    Many young people have come to mistrust big corporations, having seen their fathers or uncles eased out of ”lifetime” jobs in the relentless downsizing of the past 20 years. From the point of view of the younger generations, the loyalty their parents unstintingly gave to companies was wasted.

    The freeters have also come to see diminishing value in the grueling study and tortuous examinations required to compete for the elite jobs in academia, industry and government. With opportunities fading, long years of study are perceived as pointless. In contrast, the freeter lifestyle is one of hopping between short-term jobs and devoting energy and time to foreign travel, hobbies or other interests.

    As long ago as 2001, Japan’s Ministry of Health, Labor and Welfare estimated that 50% of high school graduates and 30% of college graduates quit their jobs within three years of leaving school. The downside is permanently shrunken income and prospects. These trends have led to an ironic moniker for the freeter lifestyle: dame-ren (no good people). The dame-ren get by on odd jobs, low-cost living and drastically diminished expectations.

    Changed Men

    The decline of permanent employment has also led to the unraveling of social mores and conventions. The young men who reject their fathers’ macho work ethic are derisively called “herbivores” or “grass-eaters” because they’re uncompetitive and uncommitted to work.

    Take the bestselling book The Herbivorous Ladylike Men Who Are Changing Japan, by Megumi Ushikubo, president of Infinity, a Tokyo marketing firm. Ushikubo claims that about two-thirds of all Japanese men aged 20-34 are now partial or total “grass-eaters.” “People who grew up in the bubble era [of the 1980s] really feel like they were let down. They worked so hard and it all came to nothing,” says Ushikubo. “So the men who came after them have changed.”

    This has spawned a disconnect between genders so pervasive that Japan is experiencing a “social recession” in marriage, births and even sex, all of which are declining.

    With a wealth and income divide widening along generational lines, many young Japanese are attaching themselves to their parents. Surveys indicate that roughly two-thirds of freeters live at home. Freeters ”who have no children, no dreams, hope or job skills could become a major burden on society, as they contribute to the decline in the birthrate and in social insurance contributions,” Masahiro Yamada, a sociology professor wrote in a magazine essay titled, ”Parasite Singles Feed on Family System.”

    Take My Son, Please

    “Parasite singles” is yet another harsh term for some Japanese youths. It refers to those who never leave home, sparking an almost tragicomical countertrend of Japanese parents who actively seek mates to marry off their “parasite single” offspring as the only way to get them out of the house.

    Even more extreme is hikikomori, or “acute social withdrawal,” a condition in which the young live-at-home person nearly walls himself off from the world by never leaving his room. Though acute social withdrawal in Japan affect both genders, impossibly high expectations for males from middle- and upper-middle-class families has led many sons, typically the eldest, to refuse to leave home. The trigger for this complete withdrawal from social interaction is often one or more traumatic episodes of social or academic failure. That is, the inability to meet standards of conduct and success that can no longer be met in diminished-opportunity Japan.

    The unraveling of Japan’s social fabric as a result of eroding economic conditions for young people offers Americans a troubling glimpse of the high costs of long-term economic stagnation.
    ENDS

    17 Responses to “Summer Tangent: DailyFinance.com on Japan’s generation-long economic stagnation leading to a lost generation of youth”

    1. Bob Says:

      This could also explain the decline recent in Yakiniku sales. And they blamed Mad Cow disease…

    2. john k Says:

      “.. tragicomical..” is this a real word????

      “..The unraveling of Japan’s social fabric as a result of eroding economic conditions for young people offers Americans a troubling glimpse of the high costs of long-term economic stagnation…”

      Where did this come from??

      If the author started by linking America’s spending their way out of recession, fine. As this is then related to Japan and its inept way of the same MO. But there is no link nor mention of the US, until this rather odd sentance at the end..????

      It seems even the Japanese are waking up and “smelling the coffee”. But recognising this only addresses what has gone wrong, or is wrong. If “they” don’t change and take real decisive action to change with a proper aim for social change in the next year or two….it’ll all be a mute point, as Japan shall become insignificant, economically anyway.

    3. Hoofin Says:

      It’s always the young people of this society who pay for the irresponsibility of their elders.

      The late Tokugawa era was like that.

      I would say the early Showa (Tojo) era was like that, as well as the Lost Decades of the 1990’s and 2000’s.

      Because bad thinking and bad systems are left in place, the changes necessary for the future don’t come about. It causes a lot of suffering and inevitably breeds a crisis situation.

      They just keep doing it.

    4. Troy Says:

      The economic elements of this essay are really unfounded.

      Japan’s share of global GDP is neither here nor there, all that matters is Japan’s ability to pay its way in the world.

      Japan had a per-capita trade surplus of 50,000, not bad all things considered.

      Given Japan’s rather intense unemployment situation, especially the situation facing young adult women, talk of freeters not pulling their own weight and the danger of “parasite singles” is bizarre.

      I tend to think Japan’s ongoing population crunch is going to be a good thing this century. There will be more jobs than people as the excess supply of labor is eliminated and the Japanese economy gets back to the basics of wealth creation.

      Much like wartime employment of women, women today are an significantly underused labor resource.

      Better to have too few people than too many at any rate.

    5. John (Yokohama) Says:

      “I tend to think Japan’s ongoing population crunch is going to be a good thing this century. There will be more jobs than people as the excess supply of labor is eliminated and the Japanese economy gets back to the basics of wealth creation.”

      Except of course that the population is not declining evenly across the board but rather aging so your dreamy little picture does not match reality and the trends direction.

      The lack of ability for Japan to pay its way is reflected in the debt to GDP numbers and the constant annual deficits. The future is Greece or worse if things continue as is.

      And before it gets thrown out there the fact that most of the government debt at the moment is held in domestic hands does not mean this won’t get bloody.

    6. DR Says:

      Related to the article above, and to dissenting voices which followed it, I would characterize Japan as being on the cusp of a perfect socio-economic storm. And not with anything optimistic to offer, in real terms. This is how I see it from where I’m sitting.

      (1) Declining birthrates, coupled with no real in-migration and a fast aging population, eliminating a present and future tax base. No money means no effective government, even if they were competent to begin with.

      (2) A debt-to-GDP ratio generally accepted as being in excess of 200%, coupled with institutions and personnel who are ossified in their approach to business and government, as exemplified by the amakudari. More of the same will get more of the same results.

      (3) A fast decline in the leading edge of technology and innovation across the board, which was farmed out and then cloned-and-bettered by the recipient countries, Indonesia, Malaysia, Taiwan, etc., and also by other genuine competitors in Korea and the PRC. LG leads Japanese manufacturers in sales of flat panel TVs in Europe. We can argue the Why? But the facts don’t change that much.

      (4) A loss of influence in world affairs and international bodies, rendering the country almost irrelevant in international affairs. Amano, in the chair’s role at the IAEA, is the only Japanese who comes to mind. Even he will be ruled irrelevant if Iran is attacked without just cause or provocation. Apart from him, who is waving the hi-no-maru in diplomatic excellence and influence? Can’t think of anyone offhand. The Akashi’s and the Ogata’s are long since gone. The Pokemon have more influence than Kan, I’d say.

      (5) Akin to the USA, Japan’s post-war and economic-miracle infrastructure is now crumbling. Chunks of concrete regularly fall from shinkansen bridges and highway overpasses, yet a visionary plan for their complete replacement is lacking, as is the cash and the workforce with which to that. With an excess of 100,000 unmarked toxic waste dumps, some nuclear, dotting the land (see Kerr’s Dogs & Demons) the land itself is rotten to the core. Even if the cash were there, the bulk of the workers now would probably lack the skills needed. There’s a price to pay for being a nation of Freeters.

      Add parasite children, net-cafe nan-min, a suicide rate still over 30,000 and nary a person pulling the national “stop-the-line” quality assurance cord, for which Toyota is famous, to the mix, and I think it’s fair to say that “Japan Inc.” is in deep doo-doo. And for the life of me I don’t see any bright spark in these dark ages with either the charisma, the sheer influence or even the interest in saving it from its own path of chosen self-destruction. Whatever one though of Horie, at least he gave hope for a while. But now it’s full speed ahead to the iceberg, and the captain is below decks having a snooze. If he exists at all. It seems a nation which views robots as a solution might actually have morphed into one. A not so benevolent one at that.

    7. jon Says:

      “Much like wartime employment of women, women today are an significantly underused labor resource.”

      Is that why hostessing is now in the top ten of most popular “career” options for young women?

      http://www.japundit.com/Economy/Once_Shunned_Hostessing_is_Now_Popular

      The social ramifications of which are too many to discuss in this box. I don’t think this is healthy at all though.

    8. Hoofin Says:

      Troy says: “Better to have too few people than too many at any rate.”

      Except “we”, the non-Japanese, are going to be blamed for the population crunch.

      Which do you think it’s easier for a demagoguing Japanese politician of the future to do:

      1) Blame the lack of young Japanese children on nonsensical policies of the Japanese ruling elite?

      2) Blame “outside forces” for the inevitable decline of Japanese society and culture?

      The problems are never of Japan’s own making, remember. It’s always someone else.

      Investment guru Bill Gross over at Pimco this month is speculating that a vibrant economy, a capitalist economy, depends on population growth. I can’t see how a declining population would help Japan in any way, and I think it just sets up future antagonism between Japan and non-Japanese.

    9. DR Says:

      By coincidence I found this link, talking of a lost generation of US youth too:
      http://www.cnbc.com/id/38674003

    10. Michael Says:

      Serious unemployment, especially at the lower end of the wage spectrum. Too many people for too few jobs. Importing labor from overseas is insanity when there are not enough jobs for the Japanese to fill. Get Japan’s economy going again, before calling for immigration. A nation that cannot help its own citizens find jobs will treat immigrants even worse.

    11. Troy Says:

      Japan’s national debt is just a shell game where people buy gov’t bonds instead of paying taxes. (Though I’m not up on Japan’s tax rate structure, I suspect much rentseeking income is not taxed highly enough).

      Japan’s old people aren’t that big a burden IMO. They don’t need much stuff, just rice, fish, vegetables, and medical care, all that can be provided domestically.

      I could be wrong about that, of course, but Japan’s working population isn’t going to disappear this century. There will be 30M 20-49 yos in 2050, down from the 48M of today. So much for the unemployment problem!

      Between now and 2050 two full generations will be raised. And in this time I hope the declining class sizes will result in better education, more on the European model. Fat chance perhaps, but this is the one thing in Japan’s power to effect.

      “Negative growth” can be a good thing. Basically the most marginal employment gets abandoned and everyone gets to move up a rung. Tho I do see the nation kinda centripetally coalescing around Tokyo, with the countryside a lot emptier in 2050.

      – As one of my university teachers would write at the bottom in lieu of a grade: “MORE RESEARCH NEEDED”.

    12. alex Says:

      Michael.

      There are not enough company jobs that provide lifetime employment. There are TONS of jobs especially in Tokyo. Whether or not people want to take the jobs is the problem.

    13. Mike Says:

      DR sure gives a pessimistic version of what is going on in Japan. I think there are many ways to look at this, and comparing the U.S. economic situation to Japan is comparing apples and oranges. The US is dealing with a different animal, one that it created. We can read about it here:

      http://www.howtobuyamerican.com/simmermaker/ba-book-4thchapter.shtml

      and also see the powers that be acting out what the author describes here:

      http://blog.jennifergranholm.com/?p=367

      (its a bit old, but it still goes on)

      As alex stated, there are many jobs in Tokyo, however most dont pay that great. Japan is still a very closed country and extremely difficult to do business with. I heard it takes several months in Japan to even start receiving payments once a commision has taken place. Also, construction companies are heavily regulated by the J gov. and almost impossible to start up. I dont think its a population problem or freeter etc. Its the gov. and unless some serious changes start, Japan will continue to be its worst enemy.

    14. jack Says:

      As much as I agree with the general idea of disaster looming in Japan’s future, I feel like the original article is fairly questionable in its argument. Am I the only one? I was thrown off by the implied assertion that being a “grass-eater” is primarily about how one approaches employment, rather than how one approaches women. The rest of the article, with its segue into parasite singles and hikikomori, really just seems like it exists to build up the author’s Japan cred and boost the word count – it’s a shallow look and, in my opinion, not really as related to the issues at hand as the author would like us to think.

      On a side note, does anyone know the title of that best-selling low-income-living book? I’m sure I’m not the only person here who read that and thought, “hmm, I don’t make too much more than that…”

    15. Harris Says:

      To DR (who refers to Dogs and Demons), I would say that Alex Kerr is questionable as an information source. Yes I know everyone reads his wretched book. I also know that he stated as fact things that are demonstrably wrong. For example,

      “There has never been a successful joint Western-Japanese or Japanese Asian film, or any highly regarded Japanese film set in another country. There are no crossover directors or producers, and since Toshiro Mifune, there has never been a major crossover actor from Japan.”

      This is unambiguously stated, so you’d expect it to have been carefully researched. Clearly not though, because he’s wrong. I won’t go into details. You could spend a couple of minutes on the Internet (many people won’t even need to do that), with particular reference to the career of Kurosawa, to find what you need. But when someone widely accepted as a Japan insider and a cultural expert says something like this, and the films that prove him wrong won Oscars – which internationally, and in the all-important American market, is about as public as you can get – then he has made a fool of himself. It also says a lot to me about Kerr’s lack of interest in the truth. He’s all about making a point, and facts can be twisted, ignored, or simply invented. So do I trust the other chapters of the book, on economics, on the environment, etc? Absolutely not.

      DR, you mention “a fast decline in the leading edge of technology and innovation across the board, which was farmed out and then cloned-and-bettered by the recipient countries, Indonesia, Malaysia, Taiwan, etc., and also by other genuine competitors in Korea and the PRC. LG leads Japanese manufacturers in sales of flat panel TVs in Europe. We can argue the Why? But the facts don’t change that much.”

      People use the term “innovation” a lot to do down Japan (as in, it lacks it), but it’s still the leading manufacturer in the region. It doesn’t just physically make these products, it also designs them, which is no small thing. With such attention to detail and quality that “made in Japan” is a selling point, just like “made in Germany”. Even with a lot of this stuff done by Japanese companies in factories in China, people trust “Japanese” products. I just don’t see your decline in tech and innovation “across the board”: Instead I see Japan pumping out goods that people want to buy, across the board. You might consider things like game consoles (Sega, Nintendo, later Sony), a market the Japanese have owned for decades, and physical media (videotape, laserdisc, DAT, minidisc, DVD, SACD, DVD Audio, Bluray), where the Japanese audio/video corporations are major players when standards are being agreed or battle lines drawn for those goddam format wars – not to mention heavy hitters when it comes to playback hardware.

      Hats off to Samsung, LG and all those others, but I see them as joining the market, not taking it over. For now.
      And it’s all very well to point out specific “gaps” in Japanese innovation – something like the iPod, and say where is Japan’s iPod – but there is no general malaise in Japanese design, engineering and manufacturing. They’re still a leader, and likely to stay that way for a while yet.

    16. DR Says:

      Folks, I posted things as I see them, and still do. Pessimism is another word for realism. I have no axe to grind, one way or the other with Japan. I think it HAS dug itself into an enormous hole and it’s still digging for a solution, when it really should stand up, step back, and reconsider. Nor do I take Alex Kerr’s “Wretched Book” as gospel. However, I am of the opinion that much of what it contains can be independently verified, and I’ve personally taken the trouble to do so, for my own curiosity. I readily concede that I know almost nothing about Japanese cinema, so “Harris”, you may well be correct on that point. But, I have two fingers well placed on the social and economic pulse of things, and the patient is sick. Terminally, I’d say. Obviously, with any diagnosis, a second opinion is always worth getting. Just base it on the facts, not the ether than comes from the “Chrysanthemum Club”. That’s what’s got Japan into this mess in the first place.

    17. Mike Says:

      I think that the domestic stituation in Japan doesnt represent how Japan is doing overseas. They have subsididaries all over asia and the US, Europe etc. The big 5, Mitsui, MHI, etc are still making it huge I bet, just not in Japan. In some markets they have no competition in Asia.

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