business

Japanese firms hang loose on cash for investors, tight on wages

18 Comments
By Tetsushi Kajimoto

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18 Comments
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What did the authorities expect? Since the bubble burst, they have pushed for the corporate sector to adopt shareholder-oriented policies, while urging the old employment-oriented policies to be scrapped. Well, this is the outcome....the shareholders and execs hog as much cash as they can while shaving operations to the bone.

"This may be a rational behavior for individual companies..."

Actually, it's not. Workers are consumers. Duh. If you don't pay them, they won't buy your products and services. Remember, kids, insufficient private demand is at the core of Japan's low growth.

4 ( +5 / -1 )

The only paragraph that needs to be read is the final one.

There is a massive regulatory problem staring Abe in the face, and he knows it - that's why it was supposed to be part of Abenomics. Addressing it with 3rd arrow reforms would unleash a wave of new business opportunities, resulting in investment, new jobs, and thus higher wages.

The morons of government just want to jump to the higher wages part, without laying any of the necessary groundwork. Individual businesses aren't about to go and commit suicide in the hope that all the others do too, leading all to dreamy paradise.

0 ( +1 / -1 )

Don't give wage rises or avoid paying emploies, all they do is have more babies. Build more robots and invest in countries with low wages so they can have more babies. Sounds like a plan.

0 ( +0 / -0 )

Wage pressure doesn't happen to the same extent as workers don't jump around as much, but you'd think as unemployment continues to fall that there would be some upward movement on wages

0 ( +0 / -0 )

Japan needs to get a more dynamic, fluid labour force. The vested interests will hate it though. Need a big crisis first for change to occur.

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Corporations are smart not to follow Abenomics directives. These gains/cash are more from exports and not sustainable for domestic economy and local workers, but gained through a weak Yen. Strong Yen will quickly reversed all gains. Paying shareholders is returning money back to investors, who provided the capital. Forced paying of more wages to employees are economically indirect "subsidies" to government in Japan, as the arrangements are socialistic, as in much of Japanese system.

0 ( +2 / -2 )

Price-adjusted wages fell 0.9% last year, the fourth straight decline

This is an Abe-favoring way to say "consumer prices rose 0.9 percentage points beyond what wages did". Wages didn't "fall"; rather, currency manipulation and money-printing devalued the wages that people earned and saved.

“Given slowing inflation, we can’t justify demanding higher pay this year,” said Masahiro Inoue, deputy secretary-general of the Japan Council of Metalworkers’ Unions

Mr. Inoue, you should be demanding higher pay because you produced more and worked more efficiently. Phrasing it this way makes you look like an Abe-Kuroda stooge who mistakenly thinks that inflation will help the people of Japan.

3 ( +3 / -0 )

So the rich ones get richer, but they cannot enjoy it just by themselves.

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Abe is concentrating on re-militarizing Japan, not "Abenomics". His actual actions show he doesn't care about that. Also, companies buy back stock as much as possible because share holders are troublesome. There are seminars in Tokyo about how to protect your company from shareholders.

1 ( +1 / -0 )

"This may be a rational behavior for individual companies..."

Actually, it's not. Workers are consumers. Duh. If you don't pay them, they won't buy your products and services. >Remember, kids, insufficient private demand is at the core of Japan's low growth.

Actually, it is. In a capitalist system, each entity acts in its own best, self interest. When you say "If you don't pay them, they won't buy your products and services.", you are considering more than one entity(company).

I distinctly remember after the financial crisis in 2008, Obama was encouraging Americans to go out and spend money. If most or all Americans heed his advice, it would be good for the US economy. But as an individual, it was in my personal best interest to hold on to as much of my cash as possible, while hoping that everyone else heed Obama's advice and go out and stimulate the economy.

Same deal here, individual Japanese companies are acting in their own best interest, while hoping others will do what it takes to lift the economy.

1 ( +2 / -1 )

Right. Surprising that this isn't clear to everyone.

1 ( +2 / -1 )

"In a capitalist system, each entity acts in its own best, self interest."

Nope. They act by what they BELIEVE is their own best self-interest -- and in the short to medium term. That behavior can be disastrous in the long term, ie, "forest for the trees." This is why the global financial industry in 2008 plunged itself into its horrendous downward cycle, (and then had to be bailed out by the US government). Japan too in 1992.

Even Greenspan admitted afterward that he had been wrong to assume that banks acting in their own "self-interest" was good for the economy.

Henry Ford understood this. He paid his workers well because he knew they would eventually use much of that money to buy ...new Fords.

-2 ( +0 / -2 )

Nope. They act by what they BELIEVE is their own best self-interest

Like lemmings, they should actually believe that they should just follow the lemming in front of them off a cliff, trusting that JeffLee and others of that fanciful wish-believe cult might just be right.

Henry Ford understood this. He paid his workers well because he knew they would eventually use much of that money to buy ...new Fords.

Somehow I don't think that Nippon Steel & Sumitomo Metal workers will buy more steel if their bosses just paid them more money.

0 ( +1 / -1 )

"Somehow I don't think that Nippon Steel & Sumitomo Metal workers will buy more steel...."

Huh? Of course they would. They would be more likely to upgrade their cars, air conditioners, motorbikes -- you name it -- if given raises or higher bonuses. And being in Japan workers, the metal in those products would very likely be made by....Nippon Steel & Sumitomo Metal.

Is this such a difficult concept to understand?

"they should actually believe that they should just follow the lemming in front of them off a cliff,...."

Which is -- actually -- what they do from time to time. ALL of Wall St.s major firms were bankrupt or heading that way in late 2008, due to their own suicidal actions.

-2 ( +0 / -2 )

Huh? Of course they would.

Maybe your textbook idea of the world has it as a certainty, but in reality, they don't.

They would be more likely to upgrade their cars, air conditioners, motorbikes -- you name it -- if given raises or higher bonuses.

"More likely" might mean a 0.2% chance instead of a 0.1% chance, so that's a weaselly way to put it.

In Japan, people predominantly save extra money, use it to pay down debts, or perhaps invest it, rather than blow it away on mottainai upgrades. Spending comes way down the list.

And when people do spend a fraction of the extra money, it's on things like travel, clothing or other smaller ticket items. Not bigger ticket items like a new car to replace a perfectly good car.

This is entirely rational behaviour given the lack of confidence people have in the future, which is due to ongoing failure of the government to implement good policies.

Is this such a difficult concept to understand?

It's not that the concept is difficult to understand, it's that it simply isn't applicable here. It's trying to treat a symptom rather than the root cause.

Evidently, this is a difficult concept to understand.

0 ( +1 / -1 )

"Maybe your textbook idea of the world...."

The idea is Henry Ford's. He wrote the textbook, as opposed to reading it.

"rather than blow it away on mottainai upgrades."

Indeed, I'm always surprised by all the ancient cars chugging along the roads, the antiquated appliances in people's homes and the old-fashioned electronics gadgets gathering dust in Yodobashi Camera. YOu dont expect me to take your statement seriously?

-2 ( +0 / -2 )

You've got that right, I wouldn't expect a zealot to take it seriously.

Others though would simply check with Google about what Japanese people spend their higher wages and bonuses on, and they'd find that it is exactly as I noted above, and not as you have claimed.

1 ( +1 / -0 )

Even Greenspan admitted afterward that he had been wrong to assume that banks acting in their own "self-interest" was >good for the economy.

You are barking up the wrong tree. I never said all entities acting in their own interest is good for the economy. I said it is best for AN entity if it acts in its own best interest, WHILE other entities do something else to lift the economy for everyone. Two different concepts here. Let others do the dirty work while I reap the full benefits.

0 ( +1 / -1 )

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