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Why rich families are rich and poor families poor in Japan

22 Comments
By Michael Hoffman

Japan is in deep trouble. Everyone knows it and the experts confirm it. True, stock prices are higher than they’ve been in 30 years; still, “going into 2024,” writes American investor and financial commentator Jim Rogers in the business magazine President (Feb 2), “I’m not optimistic about the world situation;” nor does Japan reassure him: “I don’t think the Japanese can be as prosperous or as happy as they were before.”

“Before” means the 1970s and ’80s – a lost, squandered golden age, seen from today’s pinched perspective. “It was a completely different country then,” Rogers writes. Population soared, the economy surged, there seemed nowhere to go but up; would Japan unseat the U.S. as the world’s top economy? Japanese acquisitions of prime American real estate symbolized an irresistible buoyancy that bubbled through all sectors of society, from the corporate boardroom to the disco floor. Japanese high-tech led the world, Japanese money enriched the world, Japanese tourists and shoppers flowed worldwide. Who could have foreseen then the ever-dwindling shadow Japan casts today? Emblematic (if chronic population decline is not sufficiently so) is Tokyo Shoko Research’s report last week of an eight-year-high 8,690 corporate bankruptcies in 2023. “Japan,” Rogers writes glumly in President, “could cease to exist in 50 or 100 years.”

The magazine’s own view, as reflected in several articles it presents along with Rogers’ on the theme “Rich families, poor families,” is brighter. “The difference between profiting and losing,” reads an introductory remark, “is the difference between knowing and not knowing.” Rich families know, poor ones don’t. Poor ones learning can get rich. The requisite knowledge is of circumstances and the system. The circumstances are grim and the system not always wise, but skilful steering round the shoals, given knowledge and imagination, is possible and productive. Japan and the world may be in for a rough ride. Many will be upended. But you needn’t be one of them.

Rogers himself offers copious advice on investing your way to prosperity, suggesting his unshaken faith in individual initiative – which the Japanese government itself has been actively promoting via NISA (Nippon Individual Savings Account) tax incentives to draw small investors into the stock market. Nor is investment the only road open. There’s a pension to be maximized (e.g. by working longer), tax deductions to be minimized (knowledge again the key: it’s a complex subject; boiled down to a phrase: the more you know the less tax you pay), hobbies to be turned into side if not full-time occupations (a rising and interesting trend on which more in a moment).

Let’s return first, lest we forget, to Rogers’ pessimism.

Yes, Japan’s stock prices are high – proving what? Certainly not a wave of prosperity; on the contrary, he says, Japanese in general feel poor and discontented, and with reason. Living costs rise, wages don’t, at least not in proportion. Discontent simmers through the developed world. Japan’s is not the only intellectually bankrupt government Rogers castigates. Shallow short-term solutions are everywhere deployed against deep long-term problems. You can’t prime an economy forever, he says, on government debt. Japan’s is especially high; therefore perhaps especially ominous – but the phenomenon is global. “Between 2025 and 2027,” Rogers writes, “I think the world will be full of unhappy citizens.” 

His painful analysis continues: Discontented electorates spawn politicians who blame foreigners – easy targets – for all ills. That rouses demagoguery, which raises pressure, which can push trade into trade wars and trade wars into shooting wars. Japan had better watch its step here, Rogers warns. Its falling population may not, long term, be able to sustain an economy, let alone an armed force. It’s not the least of his reasons for fearing for Japan’s future.

Stanching population loss is key to the nation’s survival, in his view. Failure to apply one if not both of two obvious possible solutions – making babies and/ or welcoming immigrants – has him shaking his head. Singapore, he says, turned its economy around on the strength of an immigrant surge that brought not only labor but new ideas. Japan sees but is not inspired.

The country stagnant, it’s up to the individual, and here, as noted, the picture brightens. Think hobbies, counsels consultant Mitsuhiro Toda in his contribution to President’s package. This is an age in which you can publish yourself, broadcast yourself, record yourself and send your voice to the world. SNS broadcasts drawing tens and hundreds of thousands of followers have turned “You-tubing” into a serious career option, much embraced, surveys show, by schoolchildren looking to the future. Success on that scale will naturally reward very few, but adequately supplementing an inadequate full-time salary is within much wider reach. If your hobby is handicrafts, sell them online; if amateur pursuit of special knowledge, lecture online. Maybe you’ve been through something and can offer experience-based counseling to others? “Or fortune-telling,” suggests Toda.

To think that that would still sell, in these sophisticated and cynical times.

© Japan Today

©2024 GPlusMedia Inc.

22 Comments
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As Billie Holiday sang, nearly a century ago:

Them that's got shall have

Them that's not shall lose

So the Bible said and it still is news

-2 ( +8 / -10 )

So, Roger's advice to people with no money is to reply on their pension and invest in the stock market.

Let me take a moment to write those words of wisdom down.

tax incentives to draw small investors into the stock market. Nor is investment the only road open. There’s a pension to be maximized

7 ( +11 / -4 )

It's the same the world over. The US is becoming a two-class nation. The rich have always ruled in every country. The working class is struggling while the rich take more and more out of the economy. Everywhere and not just in Japan.

19 ( +25 / -6 )

Japan is in deep trouble. Everyone knows it and the experts confirm it.

There will be many here who don't think so. Downvote this comment if you don't believe it.

-6 ( +15 / -21 )

Excessive economic stratification is taking place all over the world. The key word here is excessive.

Some countries still have paths for people improve their lives, but most no longer do.

13 ( +16 / -3 )

The stock market is a casino. Rising stock prices affect ordinary people about as much as a storm in the Jovian atmosphere.

Investments won't make ordinary people rich. The risky ones (BitCoin) are too risky, the safe ones crawl up. You have to start off rich for the benefits of investments to be of any size, and for the risk to be viable.

Knowledge of how to game the system won't help you very much if you are poor. If you have some disposable cash, it will help you maximise its potential.

Poor people pay so little tax that tax deductions/rebates are meaningless. Again, they only benefit the rich.

Finding ways to legally cheat the tax man isn't setting much of an example to your kids.

Side hustles, monetising hobbies, are viable as a way to make cash. Know your market, buy low and aim for a baseline of doubling your money on every sale. You are not a supermarket chain, so small profits at scale are not an option.

Vlogging is huge. A friend's daughter operates on TikTok. As long as the USG don't take it down, it is a way of making a living, but it is hard work.

There are still options to maximise your skills and income in the sharing/disruptive economy, although as happened with AirBnB and Uber in several places, governments in tandem with activists and unions are picking them off and regulating them to death. The 'Global South' may embrace opportunistic, ad hoc wealth creation, if only out of necessity, as the West target it as a threat to the status quo.

As for fortune tellers, shamans and the like. They now justify themselves as an alternative to social services, boosting confidence and providing support.

Things are only going to get tougher, so find ways to maximise your income and try to reduce your spending, to better insulate your family from penury. This used to be for extra spending money, but will increasingly become essential for many, as our governments take down the global economy and more people slip into poverty.

5 ( +11 / -6 )

The stock market is a casino.

Dead right GBR48. And in any casino, the house always wins.

Does anyone remember the Nomura scandal?

Mom and pop investors were referred to as "dust".

0 ( +7 / -7 )

Why rich families are rich and poor families poor in Japan

No mystery and it is universal and Japanese have taken to calling it "oya-gatcha".

Having property/capital holding parents and not having rent/education debts from a young age and being able to leverage those legacy capital holdings is an almost insurmountable benefit in life, at least in terms of socio-economic benefit.

Add in lower taxes on capital gains as opposed to labor and monetary easing steady income stream for rentiers and all the old adages play out.

Noble-prize winning economist Thomas Piketty does have a solution that could liberate a lot of creativity.

-2 ( +6 / -8 )

Any investor who followed Jim Rogers’ predictions over the past decade or so would indeed have become a member of the desperately impoverished class. LOL.

He’s been predicting the “worst” market and economic crash “in our lifetimes” every year for the past 15 years. The SP500 has more than quadrupled during that time.

10 ( +12 / -2 )

Another doom article written solely on speculation and cherry picking data to support the writer’s narrative.

10 ( +10 / -0 )

The US and Europe the master race craftsmen see this mass immigration is the key to their government survival this is why they have not shut the doors. They know with out population growth there is no way to sustain a economy. The large corporation know this they get tax breaks rake in huge profits and provide small salaries, inflation out paces wage growth and the distance continues to grow between the have and the have not! If you haven't learn by now or don't have a plan the signs are out there start making one.

0 ( +1 / -1 )

Roger's advice to people with no money is to reply on their pension and invest in the stock market.

You may be conflating Rogers with the article author.

I don’t remember Rogers recommending anyone buy stocks, recently at least, but I don’t track his every word.

Usually I would associate Rogers with calls to buy commodities and maybe gold and silver in particular, and never sell them.

The stock market is a casino.

No it isn’t.

See the earlier comment, the S&P 500 for example has gone up and up over the time I have been alive.

Go the casino everyday, and you will surely come out worse.

So sorry, but the stock market is not a casino.

You have to start off rich for the benefits of investments to be of any size, and for the risk to be viable.

Ok so you are telling everyone that you are not going to be opening a NISA account then.

Knowledge of how to game the system won't help you very much if you are poor.

This is a good point.

The government here always makes for overly complex systems that are difficult to understand (in that, you have to spend time thinking about it at all).

But alas there are no moves to simplify systems - only make them more complicated.

NISA is a good example.

Simpler would be to just eliminate capital gains tax - no NISA for anyone to waste time wrapping their heads around

Finding ways to legally cheat the tax man isn't setting much of an example to your kids.

So let’s have simple systems. Yes.

buy low and aim for a baseline of doubling your money on every sale.

Just not in the stock markets huh :)

2 ( +2 / -0 )

At least 17 are keeping the faith so far. When people don't want to see, don't want to know, maybe that itself is an issue.

-2 ( +1 / -3 )

I just know that the authors of "Rich dad, poor dad", the book my wife used to make fun of me, is 1 billion USD in debt...

2 ( +2 / -0 )

Rich families are rich in Japan because of money passed down from dead, rich relatives.

Poor families are poor because wages in Japan are insultingly low.

-2 ( +6 / -8 )

The world is now dominated by rentiers, i.e., asset owners.

They pay less tax on the income they get from not working than you do on the income you get from working.

The easiest way to get rich is not to "work hard". It is to work less and take rent from and/or speculate on assets. It is of course easiest to do this if you have money to begin with.

4 ( +5 / -1 )

So much for high inheritance tax in Japan. Always different ways to cheat the system.

-2 ( +1 / -3 )

Jim said the following at the beginning of last November.

"I sold Japanese stocks. Don't sell Chinese stocks." Since then, Japanese stocks are up 20% and Chinese stocks are down 10%. I have not seen his words come true, but how about you? Maybe I just don't know.

1 ( +1 / -0 )

Can I give everyone a piece of advice that took me until my 50's to really wrap my mind around. Don't use a credit card unless you know you have the funds to pay at the end of the month. In Japan you can eat for one with fresh vegetables and fruits for about 75 dollars a week and if not less if you go to the market around 6 pm when they mark food down 50 percent. Stop eating out so often keep it to once or twice a month if it is a necessity to meet up with friends.

I now am living in Canada, and not enjoying it all but came here for my child's education. The price of food is grossly high, the food in the supermarket is not appealing at all, and grossly overly inflated for what they are selling. Blessedly, I lived by motto in Japan, and I have zero debt and still living by motto which is easy to do since restaurants even Rotten Ronnie's is overpriced, too.

Here is the biggest one try and put 30 to 50 percent of your pay away for that rainy day, and yes, it is possible if you have no credit card debt. Another tip, always stop by your local second hand stores they sell almost only new items in them in Japan that is and really cheap. I have learned here in Canada that people are trying to sell their used items for almost what you pay for them new in the stores, CRAZY. So far, I have been blessed and have managed to get my used items for reasonable used prices here in Canada, but it has been truly luck and or God looking down on me and or both.

1 ( +1 / -0 )

Money makes money, money buys power, power protects wealth. Working class conditioned to be thankful for jobs that at best adequate to shelter&feed family. Need security for future? Borrow to send kids to schools. Need some extras? Borrow. The riches are busy making $$$ while the working class are constantly worrying about their future. Solution for beginners, stop being politically correct toward the riches, they exploit hard works of labor through and through. Create wealth tax to fund safety net for the working class and lift the poor out of poverty. Now the riches and ignorant scream, "it is socialist". Got new for y'all, if making working class feel secure about their future and provide poor with minimum shelter&basic need is socialist? SO BE IT.

-1 ( +0 / -1 )

The stock market is a casino

No, it isn't. Fundamental research and only investing in companies with a solid track record of EPS and stable management works well. Stop watching stock market commentators who are entertainers 1st. If a company's management is in the news more than once a year or for anything unrelated to the business, I avoid that stock. I want leadership, not personality in the leaders of my investments.

Of course, diversification is part of any stock investment plan. 10-20 stocks, of all sizes and in different industries are needed.

Perhaps I was lucky. My parents taught me how to do stock research from public information, usually at the local library, and what to look for with some very simple math and a little manual graphing of the company's fundamentals to use history to predict the future earnings. EPS leads to the stock price. Knowing the normal range of the stock price related to quarterly EPS allows someone who spends less than 1 hour a week to get similar performance to professional investors.

I started investing after college when I got a little extra month. $50/month at first, but as my paycheck increased, so did my investment monthly contributions. By my early 40s, I was making more in the stock market annually than my high paying job paid in salary.

My target return rate is 15%/yr. With that target, the invested money doubles every 5 yrs. Think about that. In the beginning doubling from $5000 --- $10000 isn't all that impressive, but when you have $250K --- $500K, that is pretty huge. If you have enough time - starting early and being consistent is very important - you'll likely get to $2M -- $4M the last few years before retiring.

With the stock market hitting all-time highs, and knowing a few very, very, common trends, it isn't hard to play the annual cycles in the global stock markets.

Barbers and Postal Workers can do this level of investing and become millionaires. Consistency is the key and never touch the money. We live far below our means. Our car is 23 yrs old. Our neighbors all thing we are poor. We dress casual and don't have any jewelry. We prefer life experiences over "things". We do have a few nice things - well, we think they are nice, but almost nobody else would.

As with anything that takes decades to achieve, if you don't start, you'll never get "there". My investments have almost been on autopilot since 2000. Prior to then, I wasted time trying to get 1% better returns, sometimes that effort reduced the returns far more.

The article seems to push for a "side-hussle" to add income over your corporate job. That requires a huge time commitment, whereas stock investing will use whatever you can give it and if you build 50-60% of your investments around a "total stock market" ETF, much of the hard stuff is handled for you. It is fun to have 10% is crazy companies you really believe have fantastic products, but don't expect anything magical for 5 yrs.

Stock investing isn't a sprint, it is back-to-back-to-back marathons lasting many decades, with annual check points and rebalancing.

0 ( +0 / -0 )

I've been rich, I've been poor....Rich is better... {Jewish humour }

0 ( +0 / -0 )

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