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tl;dr -- whether "lost decades" is a misnomer or not, evidence on the ground suggests something is going on, and it doesn't seem to be good. Some anecdotes fro

by csa 13y ago

tl;dr -- whether "lost decades" is a misnomer or not, evidence on the ground suggests something is going on, and it doesn't seem to be good. Some anecdotes from someone who has lived and worked in Japan on and off for about half of the past two decades: - The quality and quantity of jobs available to young people have dropped precipitously. Twenty years ago, university graduates from good schools seemed to have a choice of offers from high-prestige jobs (the one's they were after) like banks, megacorps, airlines, etc. These days, you see some good graduates selecting from much farther down the prestige chain (e.g., small, local corp., cram school teacher, etc.) with fewer choices (if any). - The overall quality of students seems to be lower in schools that have the same prestige. Even Todai and Kyodai students, while still impressive, don't seem to be what they used to be socially, intellectually, or academically. This isn't really directly related to the economy, but the universities are the feeders into the economy. - The corporate folks seem to complain that the quality of applicant has dropped over the past two decades, and the quality has sometimes dropped (they say) to a point below a threshold of acceptability. As such, they do not hire, hire temps, or hold their nose and hire. Some of this is certainly hubris, but none of it bodes well for the workers, the corporations, or the economy. - The number of small businesses seems to have dropped precipitously. The most obvious is bars/snacks and restaurants (e.g., once popular nightspots now seem dead even on their busiest nights), but the number of small support businesses (e.g., small light industrial shops, distributors, etc.) seem to have decreased as well. Some of this is due to legal changes that took away legally-mandated middlemen, but other parts of it seem to be due to lack of demand. - Everyone is worried about money and jobs. - The famous savers of Japan seem to be mostly the folks in their 50s and higher (maybe 40s), but the folks in their 30s and younger seem to be mooching A LOT off of these savings and not really saving as much on their own. - There is a massive generational gap between people who came of age before the bubble crashed and those who came of age after. The older folks seem to think that the younger people are lazy and just need to be more disciplined, and the younger people think the older generation just don't get the new economic reality. This tension is ripping the social fabric of Japan and seems to create a lot of inefficiencies. - The velocity of money seems a lot lower. If folks are interested, I can give some examples in a follow-up post.

kaybe 13y ago
I'm interested..
nerdo 13y ago
Go on.
csa 13y ago
VELOCITY OF MONEY -- LEGAL ASPECTS This is one of my favorite anecdotes about Japan that does a good job of exemplifying some of the changes that have happened in Japan over the past two or three decades. Before my time in Japan, maybe up to some point in the 80s, alcohol distribution was heavily regulated. I am not sure how the regs worked, but during the regulation period, there were about 7 or 8 hands touching a beer between the time it left the factory and the time it reached the consumer. Each of these hands took a cut. After deregulation, it dropped to about 2 or 3 hands, although the prices didn't really seem to change. If I recall correctly, this delayering was made due to clamoring by "the West" that Japan's market was insulated, overregulated, protected, inefficient, etc. All of these claims were pretty much true. The rest of the story that largely went untold at the time in western media (even in relatively informed higher brow publications like The Economist), was that this "inefficiency" effectively served as a social welfare net for the country in some obvious and not-so-obvious ways. Specifically: - Each of those layers of distribution created direct jobs. Some of these jobs were still needed after deregulation but in fewer numbers (e.g., delivery guys, warehouse folks, logistics managers, etc.), but some were not (e.g., most management positions that could be REALLY good for social connections but not actually needed to get the alcohol from one place to another). - Each of those layers were socially obligated to do some business with companies farther down the chain. A simple example is that a mid-level distribution company would make sure to hold their enkai parties at a restaurant/bar that is a client of a client of theirs. The owner of a typical bottom-level liquor distributorship (I have befriended a few) would visit 1-3 of their clients for a drink and maybe some food each night for 3-5 nights a week. It was an expected part of greasing the wheels of the economy. The loss of these layers, a often times the loss of the high-touch layer of distribution to discount "wholesalers", meant that the money cycled fewer times in the economy. Liquor distribution may seem like an obvious example, but this type of delayering has happened throughout the economy, and the backscratching patronage has decreased along with it. Without getting into a discussion of velocity of money, I would say that this has had a pronounced negative impact on the economy because the money just isn't cycling as much. Unfortunately this is sometimes happening by design. For those economically inclined, I don't want to suggest that the inefficient alcohol distribution system should have stayed in place. Maybe it should have, maybe it shouldn't have -- that actually gets into a tricky discussion about the weak or non-existent welfare programs in Japan and how this leads to an inability to deconstruct and reconstruct some areas of the domestic economy. My main point is that I don't think anyone had a right to be surprised that the domestic economy took a long and big hit when a high-velocity system was replaced with a low-velocity system with no other social or political changes made to pick up the slack.

by csa 13y ago

kaybe 13y ago

I'm interested..

nerdo 13y ago

Go on.

csa 13y ago

VELOCITY OF MONEY -- LEGAL ASPECTS This is one of my favorite anecdotes about Japan that does a good job of exemplifying some of the changes that have happened in Japan over the past two or three decades. Before my time in Japan, maybe up to some point in the 80s, alcohol distribution was heavily regulated. I am not sure how the regs worked, but during the regulation period, there were about 7 or 8 hands touching a beer between the time it left the factory and the time it reached the consumer. Each of these hands took a cut. After deregulation, it dropped to about 2 or 3 hands, although the prices didn't really seem to change. If I recall correctly, this delayering was made due to clamoring by "the West" that Japan's market was insulated, overregulated, protected, inefficient, etc. All of these claims were pretty much true. The rest of the story that largely went untold at the time in western media (even in relatively informed higher brow publications like The Economist), was that this "inefficiency" effectively served as a social welfare net for the country in some obvious and not-so-obvious ways. Specifically: - Each of those layers of distribution created direct jobs. Some of these jobs were still needed after deregulation but in fewer numbers (e.g., delivery guys, warehouse folks, logistics managers, etc.), but some were not (e.g., most management positions that could be REALLY good for social connections but not actually needed to get the alcohol from one place to another). - Each of those layers were socially obligated to do some business with companies farther down the chain. A simple example is that a mid-level distribution company would make sure to hold their enkai parties at a restaurant/bar that is a client of a client of theirs. The owner of a typical bottom-level liquor distributorship (I have befriended a few) would visit 1-3 of their clients for a drink and maybe some food each night for 3-5 nights a week. It was an expected part of greasing the wheels of the economy. The loss of these layers, a often times the loss of the high-touch layer of distribution to discount "wholesalers", meant that the money cycled fewer times in the economy. Liquor distribution may seem like an obvious example, but this type of delayering has happened throughout the economy, and the backscratching patronage has decreased along with it. Without getting into a discussion of velocity of money, I would say that this has had a pronounced negative impact on the economy because the money just isn't cycling as much. Unfortunately this is sometimes happening by design. For those economically inclined, I don't want to suggest that the inefficient alcohol distribution system should have stayed in place. Maybe it should have, maybe it shouldn't have -- that actually gets into a tricky discussion about the weak or non-existent welfare programs in Japan and how this leads to an inability to deconstruct and reconstruct some areas of the domestic economy. My main point is that I don't think anyone had a right to be surprised that the domestic economy took a long and big hit when a high-velocity system was replaced with a low-velocity system with no other social or political changes made to pick up the slack.