Who has more “construction workers”?

In my previous post, an investment analyst suggested the following:

Japan should focus more on creating jobs in the construction industry, to which 10 pct of its workforce belongs, he said.

To which my gut reaction was, MORE construction workers? Come on. As with the general worry that massive stimulus could create crippling levels of dependency on government largesse, a large permanent construction workforce could prove an end in itself, spurring fruitless construction projects like so many Towers of Babel.
So today I want to take a look at just what Japan’s workforce looks like and whether this guy has a point. Japan’s level of construction employment currently comes in at around 8.75%, having steadily declined since 2002:

Construction workers make up just 5% of the US non-farm civilian labor force. But then again, if you add prisoners and soldiers into the mix, you find the breakdown is  5.1% of the core workforce does construction, around 1.6% is in prison and another 1.03% is in the armed forces.

At that point the level of workers taken in by the “employment creation industries” (a term of my own creation) adds up to 7.8%. Given the comparatively miniscule incarceration and military service rates for Japan and the chronically higher unemployment rate in the US, the picture doesn’t end up looking so different from Japan.

I still don’t know whether Japan really needs more construction workers, but at least I know that there’s a somewhat equivalent population of workers in the US that makes Japan a less of an outlier.

23 thoughts on “Who has more “construction workers”?”

  1. They certainly wouldn’t need more construction workers if they would simply use poles, sticks, or other such advanced Upright Display Technologies(TM) to hold signs, rather than making all those poor, wrinkled men do it.

  2. While I cannot prove this, I have a feeling (I have family working for municipal government and a construction company) that Japanese municipalities contract out a lot more of their, say, road or park work than do US municipalities who have hordes of employees to do these types of things (as well as snow clearing, etc.) and usually none too efficiently. These people would be included in “public service” in the US, but are construction workers by any other name and could add significantly (say, around 0.5-1%) to the total.

  3. There are two factors which are usually cited to explain why Japan ought to have a higher proportion of it’s workforce engaged in construction than average. Firstly, that the country is afflicted by an above average incidence of natural disasters – earthquakes, typhoons and volcanic eruptions to the fore. Secondly, that Japan’s topology poses particular challenges which means you either end up working in coastal and mountain environments or packing everything into the plains. Either way, you have less freedom of movement. I couldn’t tell you how valid those factors are but there’s something plausible about the claim.

    In regard to employment, Japan is rightly considered to be dependent on manufacturing and exports but most commentators would be surprised if they saw that the share of manufacturing employment has been steadily declining since 1990. According to MoF data the ratio of manufacturing:non-manufacturing jobs has gone from 2:3 to 2:5 over the last 20 years.

  4. “but most commentators would be surprised if they saw that the share of manufacturing employment has been steadily declining since 1990.”

    I build a whole lecture around this shift when I teach “Postwar Japan”, but you are right, it just doesn’t come up very often in the mainstream commentary. The reason why I focus on it is because it shifts nicely into a discussion of Japan’s retail diversity, etc. So essentially it is my interest in konbini, comics and keitai straps that makes me prioritize it.

    So what to do about building domestic consumption if manufacturing for export is already a rapidly shrinking part of the workforce? I like the idea of an Australia-esque high minimum wage. If an ever larger chunk of the Japanese workforce is destined to work in retail and service, higher wages could spark consumption and ensure that individuals in these professions lead decent lives. I’m interested to hear what Mulboyne and others have to think about this idea (not mine, the DPJ has been tossing it around) and alternatives.

  5. Where I live in Gifu prefecture government funded projects keep building paved roads and elaborate retaining walls farther and farther into desolated wilderness areas. It’s great for my biking, though. On the busiest of summer days I’ve counted no more than 5 vehicles in 5 hours on my favorite route. Almost all of these were SUV’s looking for a place that they could get into 4wd and play around.

    On some of these roads after they are finished there are no longer any local volunteers to cut the back the summer weeds and some roads just completely disappear after a few years.

    On the other hand the local city that I live in is so strapped for funds as of late that they accept the lowest bids on many civil engineering projects. Which results in sub standard construction. I personally witnessed one co. installing a new sewer line without any cushioning soft soil or sand to protect it from being punctured by sharp stones in the back fill.

    Many reputable local civil engineering co.s that will not give bids that result in substandard work are now farming in our area. One such co. has started to produce and process local chili peppers and powder. They are using their extremely expensive excavators to clear weeds in between the rows of peppers.

    I’m pretty sure that Japan does not need more construction workers. I’m also positive that they do not need more stimulus funds for construction projects. What I am absolutely certain of is that the government needs to evaluate and account for the tremendous fortunes that have been wasted over the last 20 years. After such an accounting and evaluation they will be able to utilize much small budget for a greater public benefit.

    I presently run a small business. It is difficult to even pay the minimum wage of 750 yen these days as most co.s are operating in the red. If the minimum wage were raised it would need to be raised in systematic small steps as the wage increases would have to be passed on to the end consumer.

    Incidentally there was a special arrangement made for some foreign workers in Japan that circumvented the minimum wage requirements. It is my understanding that there are special type work visas that were arranged. The idea behind this law was something of the nature that Vietnamese workers for example didn’t need to be paid 750 yen per hour because of the differences in the standard of living between the two countries.

  6. They are doing away with the “trainee” program for foreigners.

    The logic of a minimum wage increase would be that if the thousands of minimum wage earners who are also potential customers for your business suddenly got a lot more money, that your business would see a volume spike and an increase in cash flow even without a significant increase in prices and that would allow you to pay your own employees more – which would allow them to go out and pump cash into other people’s businesses.

    The alternative is upwards of 1/3 of the Japanese workforce never having enough discretionary income or confidence to spend to support small businesses like your one.

    In any case, something has to be done to get more Japanese into stores spending money. Legally mandating decent wages is an option that could work. It could also give Japan a leg up in attracting the immigrants that it wants.

  7. Incidentally, that should read topography rather than topology in my comment above. Although it may seem like it some times, I don’t think Japan exists in a different dimension where its topology poses unique mathematical challenges.

  8. How would the wiggly topography of Japan compare to the much greater distances US infrastructure (roads esp) has to cover?

  9. M-Bone:
    Milton Friedman would *slap you in the face* for suggesting that. (He used to do that, right?)

    As usual, Wikipedia renders independent thought obsolete with its discussion of the minimum wage, though it reaches no definitive conclusion – apparently, the rationality of minimum wage laws is one of the most contentious issues in economics.

    I feel like your rationale would apply to wages in general – pay workers more and you can get more money flowing in the economy, right? Now, where would that money come from? For years in Japan it apparently came out of shareholders’ hides, as dividend payments were tiny compared to more shareholder friendly markets. But in recent years the rate of distribution of profits to labor has fallen in proportion to a rise in dividend payments to shareholders (and corporate taxes have been lowered, partly at the expense of the evisceration of worker protections such as social security). The earlier commenter noted that higher wages would simply raise price tags for consumers, but it could also have a redistribution effect if the old way of doing things in Japan applied or if the government agreed to take part of the hit. Traditionally, shareholders were separated from the management of firms and hence from aggressively seeking return on investment as shareholder returns were de-emphasized in favor of employment creation and fulfillment of national goals. Thus the higher cost of labor created a vast consumer market that lifted all boats. But that system was unsustainable without consistent economic growth and today it seems like there is a sharp contrast between (i) investors who see the situation as “every man for himself” as foreign investors are the most powerful players in the stock market and the mindset of investors seems to have shifted to a “take the money and run” approach in many areas, and (ii) the stagnant firms who keep out aggressive investors but are weighed down by well-paid aging salarymen.

    But then apply that rationale to the construction sector and you have to wonder – construction workers do make decent pay, but the fruit of their labors becomes a burden for the next generation who have to pay to repair the countless overhead crosswalks, failed attempts at a forestry industry, and unnecessarily concretized surfaces. The argument that more construction is needed to protect Japan against natural disasters sounds like the patently self-serving propaganda that made Alex Kerr feel ill when he read Environment Ministry brochures. Every concrete monster seems to be done in the name of dangerous flooding or earthquakes. Lot of good it did Kobe!

    Today, I feel like even higher wages at crappy jobs wouldn’t do much to alleviate the profound level of dissatisfaction and unease over the future. In my earlier post, I noted that one economist suggested raising consumption tax to 20% while giving 200,000 yen credits to compensate those who would be hardest hit. If this proposal would put the government on sound enough footing to fund even the current level of safety net programs without destroying the actual private sector economy I would be all for it.

  10. “Milton Friedman would slap you in the face for suggesting that.”

    I’d slap him right back! (Actually, I’d run the &#^$ away because he’s dead).

    Notice that I’m not saying that this is 100% correct or anything. I was just surprised to see that it worked so well in the Aussie example and am curious / cautiously optimistic for its application in Japan.

    “Now, where would that money come from?”

    Yes, it would involve #^$%ing shareholders and to some degree, small business owners. Accelerated economic activity that would result could (I’m not saying 100% would, of course, I know how controversial this is and I know that if it were easy, they could just put in a $100 an hour minimum wage and fix the economy, but that would be dreamland).

    You give a good description of the situation as it applies to the salaryman bastions, but the places that I am talking about are konbini, Micky Deeze, yankii boutiques with 3 employees, etc. Construction workers already make more than enough, as you mentioned. As Mulboyne mentioned, retail and service is the future (and the present…) and if the majority of that sector is making 650 yen an hours… the Japan that we know today does not last. I’m also in favor of reducing the salary of the 55 year old salarymen types (or at least their bonuses) and putting that toward higher minimun wages for people who would, oh, actually spend it and have kids and whatnot.

    Maybe I am advocating for radical or even irresponsible change, but let’s face it, what is there now ain’t working. If things stay in the status quo, we are only going to see a further casualization of the labor force and a decline in consumer spending. So the clowns who think that paying people squat is wonderful are really making sure that they eliminate their customer base and cause this vicious cycle – no confidence so don’t spend so economy doesn’t improve so low wages so no confidence so don’t spend so…. – to continue.

    A high minimum wage would also ramp up the competition and help to kill zombies. Works better than a headshot.

    “I feel like even higher wages at crappy jobs wouldn’t do much to alleviate the profound level of dissatisfaction and unease over the future.”

    By going the Aussie way, people at the lower level of the foodchain could DOUBLE their income and have middle class aspirations again. I don’t know about you, but if I got a massive pay hike, I’d be pretty damn optimistic. Do you remember that survey discussed on Neojaponisme last year where something like 94% of Japanese said that they would want to be born Japanese again if they were given a second chance? That screams to me of a group who want to find something to be optimistic about but who find their politicians and business leaders either failing to give them a real future vision or just plain standing in their way.

    I agree that the consumption tax is going to have to go up, but I can’t see this happening and not hurting already anaemic consumer spending. 200,000 credits would be a start, but a consumption tax hike alone could ravage retail and service. I think that something more drastic has to be done. Lifetime employment may not be coming back, but people should still be able to make a living. If not, we may live to see Japan become damn near unliveable.

  11. When I came to Japan the consumption tax was %0. Then it went up to %3 and then again to its present %5. In each increase there was a small wave of increased business activity 2-3 mos. before the increase and then after the increases took effect sales became worse than ever.

    Some several years ago they made a new law requiring the consumption tax to be hidden in the listed prices of most retail products. Which made many consumers think that their favorite products had suddenly risen in price. Most retailers took advantage of this sudden forced perceived inflation by raising prices by more than the %5. Considering the years of preceding deflation these ad on increases to the hidden consumption tax was understandable on my part.

    I’d like to see economic simulations of what would happen to the economy if the consumption tax were abolished and the minimum wage was decreased to 500 yen rather than increased.

    In the case of my small business I would hire more workers and I would be able to increase sales by having adding additional customer service. Because I wouldn’t have to pay the hidden %5 consumption tax and my cost of labor would be less expensive I wouldn’t have to raise prices on any of my goods for the increased level of customer service.

    In the end I would end up in the black and I would pay more city tax, prefectural tax, and national tax. My national health insurance premiums would also increase as a result of being in a higher income bracket. I would probably be able to build that new house that I’ve been dreaming of for years which would be an additional boost to the economy as well as increased property taxes for the prefecture.

    As for my workers that would be making 500 yen per hour that would end up equaling about 80,000 yen a month with a 40 hour work week. In this area of Japan empty Japanese houses in good condition rent out from anywhere between 5,000 to 15,000 per month. With careful planning and household budgeting it would be possible to save a small amount of money every month even at such a low wage without any overtime.

    If my workers were dissatisfied with their meager salaries and wanted more they could participate in various vocational training programs to increase their job qualifications.

    It wouldn’t be possible to live in large metropolitan areas on solely such a pittance but last time I went to Tokyo, Osaka, Nagoya etc. But does one have to live in a large city to live a healthy and fulfilled life.

    In any case there are many ways to skin a cat. The government should not be obsessed with the idea of continually raising the consumption tax. They should consider downsizing and limiting their waste as we in the private sector continually do become profitable and efficient. As long as they can keep increasing taxation and paying their own salaries and bonuses with it there can be no economic salvation.

    I always liken the system of bureaucratic taxation that prevails around the world to a mouse in a rice locker. If the mouse were to take all of the rice that it would need for a year in one day at one time we should surely notice that %70 or more of our rice had been stolen. We would probably put a mouse trap, cat, or snake in the locker to protect our last amounts of grain. Surely, the next year we’d be better prepared. But if the mouse cleverly snuck in everyday and took small increments we wouldn’t really notice the continual theft until we were hungry and had no more rice. The sole purpose of the mouse it seems is not to contribute to our productivity but to exist to eat our rice.

  12. In Australia the minimum wage for an adult is $14.31 AUD (931 YEN), if the worker is not permanent and therefore does not get contributions toward retirement they have a 20% loading on top of that. Different occupations have different award rates (government mandated minimum wage for that particular job) that are higher. The unemployment rate is 5.2%.

    Yes – in many cases things cost more (especially in comparison to mean wage) then countries like the US and UK, however, a lot of that is simply scale and distance. A population of only 22 million, with huge distances between population centres is not going to get the same benefits of economies of scale found as in the above mentioned countries. Most people can afford to live reasonably well – after all is the latest model of flat screen TV or smart phone really essential for a good quality of life? Most have phones or TVs already.

    You don’t really find the phenomena known as the working poor – people who work fulltime yet still cannot make ends meet except in the cases of those who have giant mortgages (and that’s a separate issue altogether). The idea is that the minimum wage should be something livable. You also don’t find the extremes in wealth as you do in other countries – for example the richest post code in Sydney (indeed in NSW) has a mean taxable income of $198,000 AUD (12,888,398 YEN) – which would be laughable for wealth neighbourhoods in the US, UK, and Japan.

    Also there is not really a tipping culture here. It’s appreciated, however, it’s not like someone is being deprived of money they need to live off of. They get enough through their wages alone.

  13. Thanks for the expanded information CityDweller. I was really quite surprised to learn of the Aussie minimum wage situation – and that it was maintained through a long period of conservative rule. And it has, as you said, made “working poor” less of a factor and it hasn’t killed growth – Australia’s growth rates over the past decade have outdone those of the US and Japan. It seems like such a success that you’d think more people would be discussing it outside of Australia.

    Thomas – I accept what you are saying as a “valid suggestion” for what Japan can do. But consider this – If my suggestion does not work, it can be easily fixed (just drop the minimum wage because raising it hurt the economy, businesses would be happy to comply). If your suggestion does not work, it can’t be easily fixed (as you would need to raise the minimum wage despite the fact that the original drop hurt the economy – effectively asking companies to suck it up to fix a problem that the plan caused in the first place).

    I am also wary of these 500 yen minimum wage arguments. So in 15 years, if the economy does not improve, will the demand be for a 350 yen minimum wage? 200 yen by 2050? Paying pitifully low wages has worked in manufacturing-centered development states like China because there is abundant labor – if anything Japan is in the opposite situation and relies on domestic consumption and service to drive growth. Businesses will pay as little as they can get away with, even if it wipes out their customers. That’s a recipe for the death of the countryside and social instability and a waning Japan – all things that the government should be trying to prevent.

  14. Yes that’s right, Curzon did fwd that original story along, but the gut reaction was my own. I should have mentioned that

  15. I’m always a bit dubious of schemes to increase employment by lowering wages. When I was working in Mumbai, to buy fruit or veg would involve at least 4 people, one to select the items and to weigh it, one to package it, one to ring it up on the register and yet another to collect the cash.

    All the guys were working full time, and they would have been sleeping out in the streets each night. Very low staff costs provide little reason to become more efficient. Working in developing countries gives you a very different point of view.

  16. The U.S. has a strictly enforced national minimum wage. Workers have the legal right to collectively bargain-strike. Osha enforces a myriad of protective rules and regulations (most necessary). Co.s have to pay social security, unemployment, workers comp etc. etc.

    The present economic mess in the U.S. can be blamed upon the excesses of wall-street but mainstream has been in trouble for many years. The average sales price for a home in the Detroit Metro area is now around $7,000. (U.S.). For years white collar as well as blue collar stripped all of the capital out of the economy until there wasn’t any capital left to continue.

    These Detroit auto workers and management were paid extraordinary amount of money and it did very little to boost efficiency and competitiveness as we can see by their present failures.

    I think that the rule of law is very important in protecting citizen’s rights. Whether they be employees or employers. However, there has to be careful balance kept in mind when creating these rules & regs so as to create an economic environment that is one that is good not only for the short term needs of the employees but the long term continuation of their employment.

    A basic legally enforced living wage is paramount for a civilized society. Obviously a living wage to live in Tokyo is vastly different than a living wage in the Japanese countryside. The present minimum wage of 750 yen per hour in Japan is only 100 yen different than the minimum wage at the peak of the Japanese bubble. I believe the intent in the original calculation of a standard minimum wage in Japan was a wage that would allow people to be able to survive in an average Japanese rural community. It was never to be a guarantee to be able to survive in an affluent area of one of the large metropolitan areas. Being able to live in a large metropolitan area if one so desired is a reward for a particular achievement that created an economic opportunity.

    When I was a boy the local shoe stores had professional shoe fitters that would measure your feet and then go in the back and search for an appropriate pair of shoes. The process usually took about 20-30 minutes. Being a professional shoe fitter wasn’t glamours but it was a respectable profession. These days it wouldn’t be a novelty to find such a specialty shop rather than the norm. With the ever increasing rules and regs that the average shoe store owner has to contend with they can no longer offer great service. For every $1.00 that a minimum wage is increased compounds on top of all of the other financial legal issues that are related to the employment. If the shoe store owner pays a worker $5.50 an hour the true cost with workers comp, payroll taxes, unemployment insurance, etc. calculated in comes to over $10.00 an hour. When the minimum wage is legally increased to $6.50 an hour the true cost of the worker increases to over $12.00 and so on and so on.

    Ross super stores in the U.S. are incredibly efficient. They staff an entire store with only 5-6 workers at a time. Everything gets thrown off the shelves and no one is there to put them back. They have night crews that come in after hours and efficiently work from aisle to aisle replacing all goods by morning. Then the next day the chaos begins again. They don’t even have chairs to sit on to try on shoes let alone professional shoe fitters to fit them. They have dressing stalls with half curtains rather than rooms because it is more efficient to give people less privacy as don’t stays and easier for shoplifting detection.

    I personally believe that society must have a certain safety net to help people get back on their feet. A minimal allowed payable wage fits in with that premise. But economically speaking raising the minimum wage to boost the economy makes about as much sense as saying all double ice cream cones must cost $10.00 by law or paper clips and staples must cost $2.50 a piece.

    Maybe 500 yen an hour would be too low of a minimum wage in Japan. Maybe the 750 yen that it is at is sufficient. Maybe it should be raised to 795 yen or maybe it should be lowered to 475 yen. But I think the calculation of what it should be should be an average of what it would cost to basically live and save a little in an average rural community in Japan working 40 hours a week. If a minimum wage were to be calculated for a Japanese metropolitan area it would certainly need to be somewhere between 1,000 to 1,500 yen per hour.

    I’ll also accept you recommendation M-bone as a valid suggestion. And I will agree with you that it’s better to raise the minimum wage and see what happens economically than to sit by doing nothing while the rich are getting richer. I can tell you, though, that in my co. at least one person would lose their job. Not everybody but my margins are so tight right now that if the minimum wage were raised by even 100 yen I would have to give up one particular product that hasn’t been performing up to my expectations. This would probably lead to eventual greater efficiency in my business in the long term but in the short term customers that have been buying this product would no longer be able to get it and one worker would be standing in the employment line as a result. I’m fairly resourceful and so maybe I would come up with another angle to the dangle so that I would not have to lay off my worker but my first reaction is that I would have to stay out of the red.

    I’m just running a very small business. Imagine what unscrupulous chains like McDonalds for example might do. First they would use it as an excuse to increase many of their menu prices in their marketing propaganda. Then they would decrease one of those extra staff members that always seem to be hovering around the fryer. A few workers would get a little more money per hour. A couple of workers would lose their jobs. The customers would pay more for the same garbage and swill they are already getting. Customers use to waiting 2-3 minutes may end up waiting 5-7 minutes. They’ll take it because all of the other chains will basically do the same as McDonalds. And McDonalds would continue to make more profit than ever while destroying all of their smaller competitors around them.

  17. “I can tell you, though, that in my co. at least one person would lose their job.”

    I’m not making this suggestion simply because I want to see the workers get more money. My main motive for tentatively supporting a higher minimum wage is that it could increase consumption. That would mean more business for you. You would get your dream house, maybe hire more people, your employees would make a decent living. Roses all around.

    You have mentioned that you run a small business in a small town in Japan. I’m sure that you know what the future prospects look like. Falling population means less business. Falling wages mean less business. A rise in the prices of things that you can’t control (as Japan imports more of them) like most grains and petrol will likely eat into the amount of disposable income that people will have to support your business. If one could only make 80,000 for a month of 40 hour weeks, even more young people would be deserting the countryside than now, taking their business with them. That could spell disaster for you and for Japan.

    So I’m not just saying that “Thomas should pay his employees more”, I’m saying that if Thomas and other business owners all pay employees more, it may give Japan the consumption pump that it needs.

    “First they would use it as an excuse to increase many of their menu prices in their marketing propaganda.”

    If wages were increasing, there would no doubt be inflation. I, for one, think that much of the hysteria over inflation in Japan last year was simply uninformed panic. Japan had a very high rate of inflation during the high growth years. Australia also has had far higher rates of inflation than Japan in the past 20 years. With that inflation, however, came a qualitative increase in quality of life and the kind of hope for the future that sees people buy the new TV, eat out twice a week, and have kids. A rise in prices is not bad as long as people’s means to pay those prices increases at a greater rate.

    On the subject of small business vs. McDonalds – you shouldn’t try to compete with McDonalds, you should be providing what they don’t – a good atmosphere and decent food. I don’t eat much at McDonalds in Japan and when I do, I usually just buy their loss leader 100 yen burgers. They don’t make much off me. I also think that the Japanese government should be looking at all sorts of other things to go along with a hike in the minimum wage – grants for entrepreneurs, guaranteed low interest loans, tax breaks for those who employ more people (maybe straight up job creation grants like what Obama is talking about). One of the ways the boost the vitality of the Japanese countryside is to support medium and small business and that needs to be part of the discussion.

  18. Actually if the minimum wage were 500 yen throughout Japan the young workers would flock back to the rural areas because they would never be able to even hope to live in the metropolitan areas on such an amount.

    The Japanese government has provided large amounts of funds already for entrepreneurs in Japan. Unfortunately they let the local chambers of commerce administer these low interest loans and grants. It was usually someone connected with chamber and local business leaders that ended up with these advantageous funds. So the little guys without any relatives or strong ties to the local business moguls are continually left out in the cold. Often as not it’s these little guys and gals that actually have profitable and workable business models.

    My point about McDonalds wasn’t about trying to compete with them but rather the possible effect of raising the minimum wage might have on employment in a large mega chain vs. a small business. Basically the same results with different amplifications.

    The vitality of the Japanese countryside at least where I live is getting better by the day. With these bad economic times there is a constant return of people from the large Metro areas who have to come back to live with their parents and grandparents. In the U.S. most parents would be very depressed about this but in the rural Japanese landscape most parents are very happy to have someone that will continue to tend to the ancestors
    and weed the family grave. Many of these returnees are using their new found freedom from everyday employment to attend local vocational schools. Others are starting local
    service businesses.

    I don’t believe that Japan needs a consumption pump rather than it needs to continue to adjust to an idea of necessary consumption rather than the old days of wanton consumption. There will always be consumption. People have to eat, they need clothes (especially in winter), medicine, entertainment, education, etc. Preventing by law a few Mega corps from controlling the consumption is key. It’s an unfair world we live in where the profits of this necessary consumption are dominated by a small pool of key players. Raising the minimum wage will not create an equilibrium of fairness. Enforcing monopolization laws is paramount in giving young entrepreneurs a chance at a better deal.

    I sincerely believe that wages need to be dictated solely by supply and demand principles to create much needed quality and efficiency. I also believe that a caring society needs some level of socialism to insure a safety net to fall back on. A base minimal wage that meets basis sustenance requirements is essential.

    A co. such as mine with a proven and tried business model doesn’t need any support from any government. What I do need is for the government to keep it’s hands out of my pockets until I calculate my tax owed at the end of the year and pay it. Suddenly legislating additional financial burdens that stand in the way of profit always leads to downturns rather than upturns.

    I voted for Obama and I believe in many of his economic proposals. I don’t think that raising the minimum wage has been one that any of his economic advisers have thrown out so far. Job creation investments would be much more economically viable than grants. Grants are great for wealthy individuals to offer who have more money than they know what to do with but for a country such as the U.S. that is already technically bankrupt it may be unwise. The money for any grants comes from either borrowed money or artificially created out of thin air. Money to be given as a grant should be money that does not need to be paid back in the future.

    It’s too bad that people are getting distracted with this AIG bonus business. It’s very reasonable to set strict limits on maximum wages for co.s that have received government assistance. It sounds to me like these execs are going to return this money whether they like it or not. I think Obama is listening to the outrage of his constituents over the matter and trying to do something about it. (Bush would have just ignored us and invaded another country as a distraction). Other than that governments shouldn’t dictate minimum or maximum wages other than a basic averaged sustenance level. The issues of financial remuneration for services rendered should be solely dictated by supply and demand principals in a capitalistic society. Albeit with some elements of socialism.

  19. “Albeit with some elements of socialism.”

    I agree, but here is the problem – Japan will have to grow to fund that (and many of the other reforms that you mention) and to continue to secure the resources that it needs from overseas (which will get more scarce and more expensive) and to safeguard the lives of citizens in various ways (defense, disaster relief) and to continue the universal healthcare system that it now has. So while sustainable/necessary consumption is all well and good, it would also mean the relative decline of Japan compared to other countries – including neighbors like China. It works better as an ideal than a unilateral national strategy.

    Japan also has its massive debt – that growth, but more importantly healthy inflation would help to erode.

    BTW, I also live in “the inaka” and agree that many Tokyoites are missing a recent rise in rural vitality.

  20. Ah China, India, Latin America, Africa, Indonesia and every other rabbit breeding country are definitely of great concern to all of the present G-7 (or now is it G-8 or G-20) countries. Most countries in the world could learn a lot from the present declining Japanese population. Mainly that it’s not only a good thing but necessary for sustainability as well.

    With a smaller population that is less orientated towards constant consumption there are at present enough recyclable materials in landfills to keep Japan with the raw resources that it needs to continue for at least a few decades if not centuries.

    I realize that at present that the vast majority of foods are imported. But as you have seen in most rural areas that most agricultural fields have been laying idle for almost 20 years. Maybe people don’t want to be involved in back breaking agricultural work with little pay but when hungry even a lazy blogger such as myself will pick up a shovel and start tilling the soil.

    Japan should immediately stop providing the billions of dollars in yearly grants that it is to help China as a developing nation. The wealthy in China only use this money to develop themselves and then when wealthy enough they abandon their homeland and its billion people in poverty like rats jumping off a ship. In the affluent communities associated with Silicon Valley for example more than half of the home sales are by recent chinese investor visa immigrants. They buy homes for $5,000,000 to $10,000,000. cash. The capital they used to become wealthy in many cases was provided by Japan as part of its developing nation funding.

    I’m game to try your idea of raising the minimum wage in Japan to boost the economy. As you said it can easily be turned back if it doesn’t work out. However, it should be done in small incremental amounts so as not to create shock and panic. The government would also be smart to launch a massive marketing campaign explaining how prices will start to be inflated gradually over a period of some years due to the minimum wage increases. They’d better not do such a minimum wage increase in the same year as the proposed increase in consumption tax to %10.

    In any case no matter how the game is played the rich will continue to get rich. At least until the rules of the game of capitalism are rewritten in law and enforced punishment so that all players are equally represented and rewarded in accordance with the amount of their willing participation and abilities. It sad that we live in such a world where most of the extreme wealthy actually believe that there have to be losers in order for themselves to be winners. I like Japanese Bingo. Everybody is a winner in one way or another but only a few get a great prize. I think in many ways this Japanese version of Bingo represents the post war image of an ideal fair society of where everybody is a winner in the capitalistic game and there are no absolute losers. The new present insecurity of their future is particularly unravelling for the masses that grew up with relative financial security. For the elderly that lived through the war and the very hard times after its finish they had always felt that real security was just an illusion. They saved for these hard times and are the least effected by it.

    Now many of these elderly with money and resources are stepping forward and helping out their children and grandchildren if they admit their over consumption big money spending ways were wrong and are willing to change. The government is telling people to consume and the wise who still have money are telling them that’s how they got in the financial mess they are in. Mixed messages.

    For many Japanese including many foreigners there are no relatives that can or are willing to help out during these hard times. This is where a social safety net is so important because it’s truly the last resort before starvation and homelessness. A minimum wage is a large part of an effective social safety net. Because it’s extremely important to keep people actually working doing something for the money they are receiving rather than just being on the dole and waiting for their next demotivating and degrading handout.

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