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The effects of a frugal Japanese society

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By Peter Dyloco

After the burst of the asset price bubble in the early 1990s and the prolonged recession that followed, Japan has evolved into a post-consumerist country disinterested in luxury goods.

One doesn’t have to look far to find evidence of this renewed sense of frugality. Recent polls indicate that members of the Heisei generation (post-1989) oppose the consumerist attitude of continuous acquisition. Others no longer express an interest in owning a car, buying alcohol or pursuing luxury. Families have cut down on groceries and utilities, and the number of Japanese venturing abroad for work or play has reached record lows. A stark contrast to its spendthrift days in the 1980s, consumer attitudes in Japan have taken the definition of “economical” to a whole new level.

We all know about the devastating cycle of deflation Japan currently finds itself in. Consumer demand in Japan is seemingly dependent on life support from the government: fresh infusions of incentives and tax breaks to keep people buying stuff. When the cash flow runs dry, consumer demand plummets and deflation returns, and the government digs itself deeper and deeper into debt as it comes up with (surprise!) yet another stimulus package to get people to buy again. And the cycle repeats over and over with no end in sight.

You have to understand, though, that the purpose of this article is not to suggest solutions to the problem. That’s what we have economists, market analysts and Finance Minister Noda for. Rather, the purpose of this article is to suggest the existence of a silver lining in Japan’s economic malaise: the development of unique and innovative products in post-bubble Japan; where the latest, greatest and tastiest doesn’t necessarily have to cost the most.

The best example of this comes in the form of a clothing retailer: Uniqlo. The GAP of Japan, Uniqlo has become iconic of the Japanese recession and the consequential thriftiness of those who have struggled through it. It shows. Uniqlo, a subsidiary of parent company Fast Retailing, has risen to become Japan’s biggest clothing retailer on lines of casual, affordable clothes that go for as little as 500 yen. Most importantly, however, Uniqlo has done so while preserving characteristically unique Japanese fashion; making it possible for ordinary people to look good on a budget.

In the automotive world, the Japanese have reflected a similar principle. Though one may argue on the basis of the efficiency of Japanese public transit (and are probably correct in doing so), cars remain an integral part of life in Japan. Ergo, the Honda Fit Hybrid: at 1.59 million yen, the cheapest and most efficient hybrid car in the world. The Fit Hybrid returns an astonishing 54 miles per gallon, a figure that beats every car on the market today save those of electric cars. Such will set the precedent for affordable environmental sustainability and perhaps stimulate car ownership in Japan, given its low cost of purchase and operation.

The essentials aren’t left out of the mix either. Full meals, like Yoshinoya’s oh-so-famous gyudon, can be purchased with less than 400 yen. 50 yen beers can be found in restaurants and vending machines dispensing 10 yen drinks aren’t all that uncommon. 100-yen shops supply the population with basic necessities and beyond. The best part about all this is that quality isn’t sacrificed in the name of price, which has helped the Japanese get by in these tough economic times whilst maintaining a relatively decent quality of life.

In these subtle ways, Japan’s innovative forces soldier on in the midst of its economic plight. The permanence of the cheap but chic business model in Japan remains to be seen, but until economic conditions improve, the possibility of such is by no means a detriment in any respect.

© Japan Today

©2020 GPlusMedia Inc.

21 Comments
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The permanence of the cheap but chic business model in Japan remains to be seen

The times Japan's strength lay in --cheap but good quality products-- is over as this area is covered by other Asian nations. Uniqlo is producing all its cloth outside Japan, mostly China; the mentioned Honda Fit is produced in Thailand. Where are the jobs for the people that should buy these products?

As of today 70% of the workforce up to age 35 is in unsecured temporary employment. In 2 years the baby boomer come into retirement age and by 2020 there will be only two employees to support one retiree (down from 4 to 1) in nation where the pension fonds are already on their limits.

Less people in secure well paid jobs, a savings rate that crashed from nearly 20% to under 2% (soon expected to be negative) in only 20 years, a nation that stands alone (unlike others in trouble such as Greece, Ireland, ..) a government drowning in debt and in fight with its lawmakers and its own inexperience (and partly incompetence), unable to move.

Japan Inc. will remain competitive in some few areas, but it will loose its edge in most others. Some economists expect Japan's output to sink to the current level of Indonesia by 2050. It might not come that bad, but the odds are clearly stacked against this nation.

But this might not be all bad news. Maybe the new generation is OK with Japan's smaller international role. Maybe there is more to life than being number 1 (or 2) in the world. Maybe that is what is really going on in Japan, a shift to a new paradigm, one that the older generation does not understand yet.

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None of these things are special to Japan. Market forces have been causing merchants to sell better stuff for cheaper prices for centuries. This is nothing new.

I would actually say that Japan is behind the curve in this respect. Other societies are ALWAYS finding ways to make better products for less money. Japan is only now starting to understand the value of this.

The essentials aren’t left out of the mix either. Full meals, like Yoshinoya’s oh-so-famous gyudon, can be purchased with less than 400 yen.

This is a prime example. This happened in the states over FIFTEEN years ago, when fast food chains began to earnestly compete for customer's money, and drastically lowered their prices.

This article is trying to take the normal behavior of any society with any form of free market and trying to make it into some unique Japanese concept.

Recent polls indicate that members of the Heisei generation (post-1989) oppose the consumerist attitude of continuous acquisition. Others no longer express an interest in owning a car, buying alcohol or pursuing luxury.

If any of these Heisei folks came into a lot of money, they'd shed their anti-consumer attitudes in a hurry.

Another attempted reframe: You have no money, you can't buy anything. But instead of saying you're poor, you claim to abhor consumerism, and claim your simple life is superior to that of a wall street tycoon.

That's one thing many Japanese and Japanese Apologists are good at. Reframing normal, century old human and market behavior and using it to claim some sense of Japanese cultural superiority.

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Nothing wrong with being frugal. The German do it and everything is hunky dory

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oppose the consumerist attitude of continuous acquisition

Nope - they just cant afford it. This article mistakes frugality with only being able to buy certain things.

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Actually Germany is "hunky dory" because their banks lend money to their trading partners to go into debt and buy their stuff. Nothing to do with frugality, and not exactly hunky dory either.

The interesting thing is that other countries still believe they are going to avoid Japan's fate. There are, as the great Eric Janszen has said, two parts to an economy - the productive part and the speculative part. When the speculative part hits peak credit it will go into reverse and start deflating down until you have just the productive part. A simple point but lost on most everybody. It's like "balloon time" at a Japanese baseball game, when you let go all the balloons deflate, none of them stay inflated or partially inflated. No "Keynesian" stimulus (Keynes is rolling in his grave by the way at how his theories have been butchered) or monetary hocus-pocus is going to stop the inevitable.

That doesn't mean governments and central banks should do nothing. Stimulus in Japan has meant the fall has been slow and the society didn't fall apart. Other countries are not so bright. But even if things happen slowly you are still going to have the issues the article talks about. Other countries should start paying more attention, because this stuff is not going to be unique to Japan.

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Consumer demand in Japan is seemingly dependent on life support from the government: fresh infusions of incentives and tax breaks to keep people buying stuff. When the cash flow runs dry, consumer demand plummets and deflation returns, and the government digs itself deeper and deeper into debt as it comes up with (surprise!) yet another stimulus package to get people to buy again.

Good point, that's why I disagree with people who are besotted by Japan's post-Plaza Accord economic history. The whole thing is quite distorted really.

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No "Keynesian" stimulus (Keynes is rolling in his grave by the way at how his theories have been butchered) or monetary hocus-pocus is going to stop the inevitable.

I don't think anyone in Washington DC would 'actually' allow companies to fall, and domestic economies to go stagnant without stimulus. Ben BERNANKE just recently argued for more, and that should give the US Prez the go-ahead to drop more money and stimulate the US domestic economy! Ron Paul and (incoming) Sen. Paul may argue against Stimulus Phase II-- Japan Inc got theirs early and I'm expecting it'll head to Australia in a few weeks-- but I'm very doubtful their bandwagon will have the nos.

But we'll see.

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vending machines dispensing 10 yen drinks aren’t all that uncommon.

I've never seen one. Has anyone else?

100-yen shops supply the population with basic necessities and beyond. The best part about all this is that quality isn’t sacrificed in the name of price

Sometimes true, other times less so. It might seem like a bargain at the time, but the items you can get in ¥100 stores are often seriously sub-par. Like the Malaysian chocolate bars, some of the xmas decorations, some of the toys, particularly the painted wooden toys.

Sometimes being frugal can be a mistake, better to be a skinflint and keep your money in your pocket. Better than buying dodgy articles anyway.

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Japan has evolved into a post-consumerist country disinterested in luxury goods

I started laughing after the first three words of this preposterous sentence.

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The issue long term for Japan will be if food prices become the next bubble economy. If food prices spike the govt will have to print more money to subsidize the cost of dinner. Factored in with an aging farmer (about 70 years old now) spells big time trouble for the archipelago. 40% of the daily caloric needs are provided by japanese producers, rather pathetic actually. So regardless of the apparent success of fast company or Nissan/Honda showing quarterly profits the writing is on the wall. Rather than steer the ship off the rocks I have full confidence that the ship of state will plow right onto the beach and Japan will have another "reformation". Germany wants a low euro because they are a huge exporter, so in effect frugality with low inflation is winning end game for them. Japan cannot keep the same prime minister for more than a year, how can they possibly fight the economic wars of the 21st century ? Nothing wrong with Japan falling behind the 8 ball, the question is how will they respond after the beatdown we all know is coming post 2025 ?

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Recent polls indicate that members of the Heisei generation (post-1989) oppose the consumerist attitude of continuous acquisition. Others no longer express an interest in owning a car, buying alcohol or pursuing luxury. Families have cut down on groceries and utilities, and the number of Japanese venturing abroad for work or play has reached record lows.

Oh the pathos! All thats missing in this revelation of post Heisei youths anti-materialism is mention of their new found appreciation for the mendicant monk Ryokan, dashing off poetry and fine calligraphy after making the rounds with his begging bowl or Kamo no Chomei sitting in his ten foot hut penning odes to the moon and seasons. Make no mistake, acquisitiveness hasn`t gone the way of the Dodo; the young are as eager as their parents before them to surround themselves with all the trappings and this article is much ado about nothing.

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Folks the one thing that is clear to me is that the enitire world economy is more & more like a pyramid or ponsi scheme & its becoming harder & harder to hide the fact, its all coming to roost, the future is going to be exciting but not necessarily prosperous!

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Most of the Japanese I know - and that includes couples who both work and one of which is a high level manager - would crawl across broken glass to save 500 yen. It came as quite a surprise to know so many people who were going mental for the recent 'eco points' deal on TVs. It's strange to think that the Japanese save a high proportion of their salaries in return for essentially zero percent interest in return. It defies logic. And if I tell them that I bought something like a camera or a Mac, Japanese friends make that 'shocked beyond belief' face and go "eeeeeeeee?" as if I've just broken into Fort Knox and spent all the money therein. I don't know how they got so pathological about spending money - non of them spending money results in .... deflation, so non of them benefit.

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Collecting fiat currency never made sense to me. A Zimbabwe $100 Trillion bill is only worth about ~$30 US. So a trillionaire in fiat Zimbabwe currency can't even buy a burger or a newspaper.

You could have used the fiat money to buy some nice shoes/jewelry which would have kept their value and you would look much better. I only see Silver and Gold going up with this "currency war" inflation (devaluation of fiat money).

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“Reframing normal, century old human and market behavior and using it to claim some sense of Japanese cultural superiority.”

Since when is saving money equivalent to claiming cultural superiority? True, Japan has gone, perhaps, too far in this direction, but the reverse was the case prior to this swing. So, there exists, apparently, a pendulum phenomena, despite any lofty theories. Maybe the focus should be on “why should a pendulum phenomena exist at all”. Any theories?

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Saving is good, ignore the corporate cheerleaders and make one's own future a little more secure.

Japan as an economy has weakened and everybody's gonna have to get used to living a little less comfortably, same as America.

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I am not so sure that Jpn still saves like they used to, I think people under 40 are typically living within their means & more & more have racked up their CCs & getting $$ from the various legal loan sharks Jpn has.

I think most of the saved money is in the older folks accounts & is being depleated & once gone.........

Jpn really looks like it wants to become a 3rd world country & may get its wish

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@dammit

Might have been a typo

But still a lot cheaper than a lot of other countries. In 19 years, I saw most drinks in Japan go up about 20%, if that, compared to 150% plus back home.

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I have 100 yen drinks but never 10

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The Japanese govt. will see a new meaning of frugal if it raises the sales tax. For my part, I'll tighten the purse strings so much that they will scream bloody murder.

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The worst effect of Japan's meltdown was always asset-price deflation anyway, with stocks declining sharply in early 1990 and land prices beginning their long downward slope in 1991. Consumer prices have been much less severely impacted.

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