There are lots of preconceptions about poverty. On the right, a common idea is that poor people mainly have their own behavior to blame — that if they worked more, committed less crime, had fewer out-of-wedlock births and did fewer drugs, the poverty rate would plummet. Meanwhile, many liberals blame poverty on free-market policies that have weakened unions and eliminated the corporate-welfare state.
Both of these stories sound plausible, and both may be important factors. But when I look at Japan, I see plenty of evidence that neither individual behavior nor free-market policy is the main reason for poverty. As in so many areas of economics, Japan confounds our conventional wisdom. The stereotype of Japan as a low-poverty country isn't accurate. It's true that Japan had relatively few poor people — and was a very equal society — as recently as the early 1980s. But since then, the national poverty rate has risen relentlessly.
Now, a new UNICEF report informs us that on at least one key measure, child poverty, Japan has fallen behind the United States. The report looked at the gap between the income of the poorest Japanese families with children and the average household income. On this measure, Japan now ranks 34th worst out of 41 developed countries. In comparison, the U.S. ranks 30th.