Let's Japan.org Debunking Eikaiwa and Ramblings in Japan

As was reported last week, Japan's fertility rate is up but the population is still in decline:

Japan's fertility rate edged up for a third consecutive year in 2008, three years after dropping to a record low of 1.26 in 2005, the health ministry said Wednesday.

The total fertility rate, or the estimated number of children a woman would bear in her lifetime based on current birth trends, rose 0.03 point to an average of 1.37 compared with a year ago.

[...]

Meanwhile, deaths rose to a record of 1.14 million, up 34,133 from a year ago and the highest since 1947, as mortality continued to outpace births.

This resulted in the population shrinking by a record 51,317 in 2008 — the steepest fall ever.

Japan's population shrank by 18,516 in 2007.

Meanwhile, the writing's on the wall:

A vacant elementary school in Niikappu, Hokkaido, that was put up for sale online has been purchased by an Osaka-based operator of spas and hot springs.

With a successful bid of ¥30 million, Mitaka Club hopes to turn the school into an art museum, according to town officials.

Good luck with that.

No buyers have stepped forward for the three other buildings, but the town, a two-hour drive from Sapporo, is currently negotiating their possible sale with a Hokkaido educational foundation, municipal officials said.

"I am happy that we put the facilities for sale online to reinvigorate the local community," said Mayor Kuniaki Kotake. "It sets a precedent for the future."

Niikappu's population, which stood at 5,901 at the end of March, has been declining for the past decade, especially in the number of children, prompting the town to close seven of its nine elementary schools in April 2008.

No buyers for the three other buildings up for sale, 7 of 9 elementary schools closed, and a population in decline for a decade. The mayor's happy he used the internet to sell a building, but I wonder why the new owner thinks buying an empty school is a good idea. How viable is an art museum in a shrinking town? Maybe he has plans for a giant ferris wheel, like the one in Kamifurano.

Niikappu illustrates is the severity of Japan's demographic problem. While the population continues to concentrate in urban areas, the hinterlands are becoming barren. There won't be any redevelopment of buildings and towns if there's nobody around to live in them.

Ｉt's not as if this problem snuck up on Japan, either. The fertility rate peaked in the 1970s (report in Japanese), but the government chose to ignore the problem instead of thinking about ways to mitigate it. Now reality has taken over and the best they can do is hope men take more time off to make babies. Niikappu is just one of many soon-to-be-ghost towns that will suffer a fate much like that of Yubari.

A propos my comment on now being a bad time to come to Japan, an example of how the economic meltdown affects English teachers:

Though many municipalities plan to employ native English speakers or bilingual people to teach public primary schools' fifth- and sixth-grade students' English classes in April, a recent Yomiuri Shimbun survey showed that some cash-strapped municipalities are reluctant to do so for financial reasons.

[...]

However, some cash-strapped municipalities have no prospect of employing assistant language teachers. Yamagata Prefecture's Shinjo municipal government, which is required by the Internal Affairs and Communications Ministry to reconstruct its finances, has scheduled 15 or more English classes at its 10 primary schools, but has no plans to employ assistant language teachers.

"We had to put priority on measures to strengthen the earthquake-resistance of school buildings, which is more urgent," an official of the Shinjo municipal board of education said.

The Okushiricho town government in Hokkaido has not considered employing assistant teachers. It plans to hold 35 English classes in fiscal 2009, but the classes will be taught by Japanese teachers.

It's also bad for foreign students:

According to the Japan Student Services Organization (JASSO), the number of foreign students studying in Japan at universities, graduate schools and junior colleges has been on the rise in recent years. As of May 1 last year, a record 123,829 foreign students were studying in Japan, up 5,331 from the previous year. About 60 percent of the foreign students came from China, followed by students from South Korea, Taiwan and Vietnam, according to JASSO.

Many students from Asia hope to work in Japan. However, only 10,262 students were able to obtain working visas in 2007 after finding jobs. Many students ended up returning to their home countries after failing to find work.

The employment situation for foreign students has gone from bad to worse due to the economic downturn. According to the Tokyo Employment Service Center for Foreigners--a job-placement office for foreign residents--there were 252 job listings targeting foreign students graduating in March available at the center as of Jan. 31, down 54 from the same period last year.

According to the organization, it is mainly small and medium-size companies that seek employees through the center. However, general manager Kazuo Hirasawa said companies across the spectrum are cutting the number of foreign students they hire.

And it's terrible if you happen to be a nikkei Brazilian worker. The Japanese government would like you to leave:

Japan is offering $3,000 for a plane ticket home to some foreigners who have lost their jobs, a sign of just how bad the economic slump has gotten.

The program, which began Wednesday, applies only to several hundred thousand South Americans of Japanese descent on special visas for factory work. The government's motivation appears to be three-fold: help the workers get home, ease pressure on the domestic labor market and potentially get thousands of people off the unemployment rolls.

"The program is to respond to a growing social problem," said Hiroshi Yamashita, an official at the Ministry of Health, Labor and Welfare, referring to joblessness, which has climbed to a three-year high of 4.4 percent.

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:

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.