As Japan's economy began to meltdown last year, the Japan Times ran a couple of articles detailing how people were coping. One article was about a surge in the sales of bicycles while another noted how more and more people were turning to car-sharing as an alternative to owning a car.
Cycling back in fashion:
While automakers are suffering from slumping sales amid the global economic downturn and accelerating efforts to develop green cars to spur new demand, the traditional green vehicle — the bicycle — is becoming more popular.
"Usually, bicycles sell well in the high season of summer and business is slow when it gets colder, but this year we have remained very busy," said Daisuke Nishikoori, manager of the Y's Road bicycle chain's outlet in Tokyo's Ikebukuro district.
Consumers' growing awareness of health issues and the surge in gasoline prices to record levels in 2008 have increased bicycles' appeal, while a wider variety of lineups and fashionable outfits for cycling have attracted more people, he said.
At Nishikoori's store, imported sports bicycles, some of which cost more than ¥100,000, are selling well, as more retired men take to cycling as a hobby, he said. More customers are also becoming interested in commuting by bicycle, he added.
A Japan Bicycle Promotion Institute poll of 100 designated retailers nationwide showed sales of sports bikes had double-digit or sometimes triple-digit percentage growth rates every month through last November compared with year-earlier levels.
Car-sharing is shifting into a higher gear as people try to save on vehicle maintenance costs and reduce their carbon footprint.
Some people who have joined car-sharing plans have sold their cars.
"I used to only use my car on weekends, and increasingly thought that was a waste," a 35-year-old Tokyo woman said. "After discovering that the condominium complex where I moved has a car-sharing service, I decided to get rid of my car."
There's nothing remarkable about these practical responses to the economic downturn, unless you happen to be a car manufacturer:
To get around the city, Yutaka Makino hops on his skateboard or takes the trains. Does he dream of the day when he owns his own car? Not a chance.
Like many Japanese of his generation, the 28-year-old musician and part-time maintenance worker says owning a car is more trouble than it's worth, especially in a congested city where monthly parking runs as much as ¥30,000 ($330), and gas costs about ¥100 a liter (about $3.50 a gallon).
That kind of thinking — which has been dubbed by automakers as "kuruma banare," or "demotorization" — represents a U-turn from the thinking of earlier generations of Japanese who viewed cars as status symbols. The trend is worrying auto executives who fear the nation's love affair with automobiles is coming to an end.
Suddenly, "that kind of thinking" is threatening to business, and the Yutaka Makinos of the world are putting the economy in peril:
Unlike other industrialized nations, there is a lack of other powerful sectors to drive the economy, such as financials and services. Consumer spending makes up about 60 percent of GDP.
The damage caused by a declining auto industry would be devastating because so many jobs would be affected — not only at plants but as parts makers, distributors and other companies, including those that make electronics, batteries and other products for the industry.
Already, automakers here have shed thousands of jobs at plants that have been producing cars for overseas markets with a bigger thirst for autos. Toyota is projecting its first operating loss in 70 years.
This same kind of reporting that equates the lack of consumption with the collapse of the economy also appeared in a recent New York Times article:
The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.
Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.
The Takigasaki family in the Tokyo suburb of Nakano goes further to save a yen or two. Although the family has a comfortable nest egg, Hiroko Takigasaki carefully rations her vegetables. When she goes through too many in a given week, she reverts to her cost-saving standby: cabbage stew.
“You can make almost anything with some cabbage, and perhaps some potato,” says Mrs. Takigasaki, 49, who works part time at a home for people with disabilities.
Her husband has a well-paying job with the electronics giant Fujitsu, but “I don’t know when the ax will drop,” she says. “Really, we need to save much, much more.”
Japan eventually pulled itself out of the Lost Decade of the 1990s, thanks in part to a boom in exports to the United States and China. But even as the economy expanded, shell-shocked consumers refused to spend. Between 2001 and 2007, per-capita consumer spending rose only 0.2 percent.
Now, as exports dry up amid a worldwide collapse in demand, Japan’s economy is in free-fall because it cannot rely on domestic consumption to pick up the slack.
The same story in the Star Tribune carries it a bit further with the headline: As Japan shows, thrifty isn't always a good thing.
What kind of bizarro world do we live in? It's the fault of consumers that the economy is in free fall? If you spend, you're good; if you save, you're bad. Apparently, the public is supposed to go on a spending spree like there's no tomorrow.
While the Takigasakis are doing their best to ruin Japan, the New York Times also fingered the following people as further examples of Japan's doom:
Young Japanese women even seem to be losing their once- insatiable thirst for foreign fashion. Louis Vuitton, for example, reported a 10 percent drop in its sales in Japan in 2008.
“I’m not interested in big spending,” says Risa Masaki, 20, a college student in Tokyo and a neighbor of the Takigasakis. “I just want a humble life.”
The sky is falling! How will Japan's young'uns live without designer bags?
Japan’s aging population is not helping consumption. Businesses had hoped that baby boomers — the generation that reaped the benefits of Japan’s postwar breakneck economic growth — would splurge their lifetime savings upon retirement, which began en masse in 2007. But that has not happened at the scale that companies had hoped.
Curse those tight-fisted old people. It's as if they've experienced a depression before. They should really be out there splurging.
Hiromi Kobayashi, 38, a Tokyo homemaker, has taken to sewing children’s ballet clothes at home to supplement income from her husband’s job at a movie distribution company. The family has not gone on vacation in two years and still watches a cathode-ray tube TV. Mrs. Kobayashi has her eye on a flat-panel TV but is holding off.
“I’m going to find a bargain, then wait until it gets even cheaper,” she says.
A pox on you, Hiromi, for not getting with the program and throwing out your perfectly good TV.
All of these examples of bad consumption, however, are examples of discretionary spending. If Japan's economic salvation lies in designer handbags, spending-sprees by the elderly, and flat-screen TVs, there's not much hope for the nation. The NYT chooses to focus on the lack of consumption while downplaying the role of companies, who have effectively sown the seeds of their own destruction by unraveling job security and cutting costs by switching to cheap labor. Their policies have produced families like the Takigasakis and individuals like Yutaka Makino.
The Takigasakis don't appear to be hurting for money, but fears about job security have forced them to be careful about their spending. On the other hand, Yutaka Makino, in the Japan Times story, doesn't have much money to begin with. He's a part-time worker, probably on a contract that may not be renewed when it expires, and lives in an apartment full of wooden crates. His low income guarantees that he will not be buying big ticket items like a new car.
It should come as no surprise that people would change their behavior in a crisis. The switches to bicycles, car-sharing, and general lack of discretionary spending isn't necessarily the result of people ditching cars to protect the environment. Being thrifty is called living within your means, which is what people do in order to get through difficult times.
Circumstances have compelled people to change their consumption patterns and how they live. Unfortunately, leaders around the world are hooked on consumption and perpetual economic growth like crack junkies. Even though the financial banking system has imploded, they are furiously trying to kick start the system that resulted in the collapse in the first place. It never occurs to them that the public has already reacted to the crisis by reorganizing the activities of daily life. Instead, governments are trying to drag everyone back into sustaining the unsustainable. Ratcheting up consumerism isn't a solution. Given Japan's depressed consumption patterns for the past decade or more and its rapidly aging society, I don't think it could boost consumption if it wanted to.