If Shukan Bunshun and Shukan Diamond are both right, Japan is in serious trouble.
The former says the nation’s middle class is vanishing. The latter says the rich are deserting.
The descent into national poverty that these developments imply would be a shattering epilogue to the “Japanese miracle,” the postwar ascent from ruin to economic superpowerdom.
Through the two “lost decades” of economic floundering that threaten the struggling middle class with extinction, Japan’s rich, defined as owning financial assets (excluding real estate) worth ¥100 million or more, have done well for themselves. They constitute a class of 1.74 million, says Shukan Diamond — up from 1.2 million in 2001. As a breeder of wealth on that scale, Japan ranks second only to the United States. Sixteen percent of the world’s 10.9 million “millionaires” are Japanese.
But to many of them Japan seems a sinking ship. “I haven’t the slightest desire to return to Japan,” Shukan Diamond hears from a Japanese financier in his 30s. He’s currently based in Hong Kong but seeking new outlets for his restless energies. Japan isn’t on his list. It’s saturated in radiation, he says, and prey to a wavering government that got elected on a promise to lower taxes but now looks poised to raise them. If his analysis seems to blunt some nuances, the point isn’t so much whether he’s right or wrong as that that’s how Japan looks to a lot of people with wealth to protect and the freedom to live where they please. If Japan is prone to earthquakes, why invest in Japanese real estate when you can buy property in Hawaii? If higher taxes seem likely here, why not move to Singapore, where taxes are low and which already hosts a Japanese community of 20,000? If radiation fear stalks you, pristine Canada beckons.
A Tokyo hospital director the magazine speaks to, a woman in her 40s, feels tied to Japan by her job — but she sends her daughter to high school in Canada, thus sparing herself worries about the girl’s long-term health. The magazine doesn’t tell us how many people are involved in this outward migration, but the financial impact of their departure is likely to be far out of proportion to their numbers.
That’s partly why the rich are so richly despised in these Occupy Wall Street days — everything they do has an impact on people whose existence they sometimes give the impression of disdaining to acknowledge. The enduring symbol of their irresponsible depredations is the Lehman Shock of 2008. The Lehman Brothers investment bank collapsed in New York, and in Japan, says Shukan Bunshun, salaries the following year plunged an average 4.4 percent.
There’s more to this of course than one cause, one effect. Japan’s middle class has been faltering for two decades, going on three. Economic stagnation over the past 12 years has cost Japanese workers ¥220 trillion in lost or declining salaries, Shukan Bunshun calculates. Pre-Lehman, the problem was corporations cutting full-time staff in favor of part-timers and temps, to the point that now some one-third of the Japanese work force is part-time. Things were bad and getting worse, but, pre-Lehman, if you could secure and hang on to a full-time job you could still cling to middle-class aspirations. That’s no longer true. Salaries even among full-time workers, even those in large corporations, are now more likely to fall year by year than to rise.
“I know how other industries are doing, salary-wise, from people’s loan applications” says a bank loan officer. “In the private sector, pay is falling across the board. The only ones earning good money are the civil servants.”
For young people in what for all its woes is still the world’s third-largest economy, it’s like being born into poverty. A 2010 survey of wages in Aichi Prefecture found 55 percent of male company employees in their 20s taking home less than ¥200,000 a month. The only way to live decently on that is to rely on parents — a stopgap solution at best that hobbles a person’s advance into full-fledged adulthood.
“I graduated from a national university and got a job,” Shukan Bunshun hears from a man who’s now 33. “But I was into my upper 20s before I was earning more than ¥200,000 a month. Since then, my salary has hardly gone up at all. What life is going to be like 10 years from now I simply can’t imagine. My wife’s mother built a ‘two-generation home’ for us and for her. That’s what saved us.”
Not everyone can count on similar salvation. The overall state of the economy, plus dizzying reconstruction costs in the wake of March’s earthquake-tsunami-meltdown catastrophe in the northeast, will call forth higher taxes, higher pension premiums and, eventually, deferred pension eligibility — to 65 from 60, though most employees will continue to be forced to retire at 60. Will aging parents facing a 5-year “income vacuum” be able to support needy though working children?
That’s not something a certain 56-year-old retired business executive Shukan Diamond speaks to has to worry about. His fortune of “several hundred million yen” would see him and his family comfortably through harder times than Japan’s. Still, why should he bother? He prefers Malaysia and its relative freedom from earthquakes and typhoons. At home, moreover, “I’d be paying the highest tax rate,” he says — “and what for? The way politics is going, Japan’s future looks dark indeed.”