Japan in Their Own Words (JITOW)/日本からの意見

The Japanese Economy is Strangling Itself
Akio Kawato / Former Ambassador in Uzbekistan and Tajikistan , Newsweek Japan Columnist

January 11, 2022
Lately, one of my friends complained to me, saying "Japan has become poor." When asked to explain, he said that hotel charges in the United States and Europe are about three times those in Japan. It is true that in recent years, the Japanese GDP has steadily lagged behind that of the United States and China and is now likely to be overtaken by Germany.

However, that statement doesn't really feel correct. When I went to the United States two years ago, I was shocked by the poor looks of the passengers in subway. Even though the standard of living of the upper middle class in the United States is comparable to that of the upper class of Japan, the overall status of those below the middle class in the United States can hardly be referred to as "doing well". Even though Japanese houses used to be disparaged as "rabbit huts" and even now are smaller in size than those in Western countries, the interior amenities have definitely surpassed the average of those countries.

Taking the opposite view of my acquaintance, the fact that you can stay in a hotel that is more comfortable than the average hotel in Western countries for one-third the price means that the Japanese are rich, doesn't it?

So actually, rather than the Japanese standard of living declining with respect to Western countries (certainly, the cityscape is still inferior), for the past several years, the two regions have been experiencing an economic disparity caused by continued inflation in the West and deflation in Japan and exacerbated by the recent over depreciation of the yen.

In the 10 years since the subprime mortgage crisis of 2008, the cumulative total of inflation in the United States is 27.8%, and in France, 12.2%. In comparison, Japan's cumulative total is about 5%. In the same period, the yen's rate against the dollar fell by about 34%. The United States greatly eased its monetary policy and the result is inflation. In Japan, the Abe Administration enacted "unprecedented monetary easing" but was ineffective in countering deflation.

Why? The basic reason is that many Japanese are wary of "making money with money", i.e., speculative investments. In the United States, the majority of people manage their retirement savings with investment trust funds. These trust companies leverage the money 20 or 30 times in "investments" and yield a profit for themselves in the process. Because of this, the finance and insurance industry accounts for 6.8% of the United States' GDP. This is 4.1% in Japan, which may not seem to be a large difference but amounts to almost 120 trillion yen. In other words, the United States has a bubble economy, but as long as the bubble does not burst, the wealth is real.

Some people in Japan want to maintain the status quo and say that growth is not currently necessary. However, if the economy fails to grow and revenues do not increase, the quality of social security and medical care will decline and the armaments of the Self-Defense Forces will eventually be surpassed even by South Korea.

The trauma after the burst of the economic bubble still remains deep in our psychology and consumers continue to tighten their purse strings. Companies limit pay raises and refrain from investing. Thus, the economy does not grow, and consumers and businesses become increasingly frugal - this is how we are strangling ourselves in a vicious cycle of restraint and deflation. This will indeed make us poor.

There is an economic indicator known as the "Big Mac Index". This index uses the cost of the ubiquitous Big Mac in the local currency to calculate the actual purchasing power rate. According to this index, one dollar is equivalent to about 70 yen instead of the current 115 yen. If Japan's GDP were converted into dollars using this index, 115 ÷ 70 = 1.64, the result would be 64% larger than the current figure.

Overambitious measures are not necessary. However, we do need to renovate the aging infrastructure regularly every year, prepare for ever-increasing catastrophic disasters, and increase investment in renewable energy. Furthermore, even if pay raises are not possible, if the companies decide to distribute a portion of increased revenues as bonuses, I think that the vicious cycle of deflation may be broken.

A fixated belief in a shrinking economy will definitely result in a shrinking economy. In comparison with most of the countries in the world, Japan has abundant historical and social factors that can contribute to growth, so let's press forward with less worry.

Akio Kawato is Former Ambassador to Uzbekistan and Tajikistan, Columnist Newsweek Japan.
The English-Speaking Union of Japan

河東 哲夫 / 元駐ウズベキスタン・大使、日本版Newsweekコラムニスト

2022年 1月 11日



2008年のリーマン危機以降の10年で、米国のインフレ率は累計27,8%、フランスでも12,2%に達している。これに対して日本は約5% (1)。そして円の対ドル・レートは、約34%下がっている(2) 。米国は金融を大幅に緩和したので、インフレ傾向になった。日本も安倍政権が「異次元緩和」したものの、デフレ傾向は治らない。

なぜだろう。そこには、日本人は「カネでカネを作る」、つまり投機的な投資を怖がる、という基本的な要因がある。米国では老後への貯金を投資信託で運用する者が過半数。信託会社はそのカネを20倍、30倍にも膨らませて「投資」をし、自分でも儲けていく。だから米国では金融・保険業がGDPの6.8%を占める。日本ではこれは4.1%で大差はない (3)ように見えるが、絶対額では120兆円弱もの差になる。別の言葉で言えば、米国経済はそれだけ水ぶくれ(カネぶくれ)しているのだが、そのバブルが破裂しなければ、リアルな富になる。





(1). https://ecodb.net/ranking/old/group/XB/imf_pcpipch_2011.htmlから自分で計算。
(2). 2011年~2020年 https://ecodb.net/exchange/usd_jpy.html
(3). US Bureau of Economic Analysis(2020年)と内閣府「2019年度国民経済計算」


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