When Consumers Cut Back: A Lesson From Japan

[RedEarth]

TOKYO — As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect.

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.

http://www.nytimes.com/2009/02/22/business/worldbusiness/22japan.html?_r=1

[FreakinDJ]

1. Japan embraced "Trickle Down Economics" in late 80s

Glad to see this is working out all so well for them too

[Double T]

2. I'll drink the saki over the kool-aid any day.

[no_hypocrisy]

3. How can you not cut back?

Even if you're working, you're not compensated sufficiently to support the economy by consumerism.

Your credit history is challenged. Which financial institute will loan you money?

Which financial institute is loaning money to consumers?

You don't have enough money in your savings.

You don't want to spend yourself into bankruptcy.

Looks like you lose when you spend responsibly. The issue is that the system was set up for consumers to spend more than they earned indefinitely.

[eleny]

6. And if people are near retirement they have to replenish what was lost

They could have lost from their 401k plans and their houses, if they own, have lost value. So you have to have something to live on when you get old.

We already know how nobody needs us and I doubt they'll feed us when we're 64.

[Earth Bound Misfit]

15. If you say the word....

I could stay with you.:-)

[Chulanowa]

12. The article sums it up...

it refers to the people as "economic dead weight"

That really says all you need to know about the article's direction. Our only reason for existence is to spend, spend, spend, and if we hold on to what we have, well, the damage to the economy is our fault because we're not doing our "duty" of spending constantly.

[Double T]

4. Looks like we are on track to have lost decade(s).

Time to dig out the recipe for stone soup and contact all my fellow peasants.

[BeyondGeography]

5. The Japanese have cut their whiskey consumption by 80% and aren't buying cars

per the article, which also makes fun of a well-to-do woman who refuses to waste vegetables and would have us be upset at a young person who "wants to live a humble life."

Reads like the Japanese have seen one of the upsides of a sideways moving economy is that they get to reject the consumerist dystopia and all the unhealthy stress and behaviors that go with it, and the New York Times is missing/refusing to accept the point. They shouldn't fret; there's no chance of that happening here. We're not wired for self-discipline like them, nor do we see the virtue of less.

[shari]

7. Many of us have been

living within our means for a long time. Contrary to the 'labels' put on us by much of the world most Americans are not rich, fat, or lazy. Comments like this "We're not wired for self-discipline like them, nor do we see the virtue of less" sometimes make me see red. In all fairness though, most of us, like most other people in the world, will enjoy a higher standard of living when we can afford it. A large percentage of Americans are blue collar workers living from paycheck to paycheck and don't have a lot of extra for luxuries, and yes, we do know how to be frugal and make do with less when necessary.

[BeyondGeography]

8. Is that why our personal debt is 140% of GDP?

Get a grip, please.

[shari]

9. I would suggest that 'YOU' get a grip please.

Are American consumers spending now? Are we that different than those in other countries who are having hard times? Maybe, just maybe, some of that GDP is a direct result of the baboons who have been running this country for the last eight years? Americans are hurting just like everyone else in the world and we will deal with it like they do.

[ixion]

10. thrift is disastrous?

I think not. The converse is true, evidenced by the sh*t creek we're up right now.

[depakid]

13. Nope- that's why it's a paradox

...if everyone saves more money during times of recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth.

What seems wise on the individual level isn't so when viewed collectively.

http://en.wikipedia.org/wiki/Paradox_of_thrift

[ixion]

14. Constant consumption is no long-term survival strategy

whether in an individual context or a social (collective) one. Why? Because you can't continue to increase the population and thereby increase the rate of consumption indefinitely. There are finite resources, and eventually the consumption strategy fails, as we see now.

[Joe Chi Minh]

11. The lesson for governments should be: buttress the welfare state as much as possible.

Provided the rich are appropriately taxed, that way, the money will be recycled through the community in a relatively stable society, while continually returning profits to the business owners.

The Second Commandment makes as much sense as the First. Mankind is a community. What we are seeing, at present, is the truth of the saying that God is not mocked. You reap what you sow.

[NJCher]

16. Economy has to be centered around the environment

And learning how to live with without trashing it. That's why one part of Obama's stimulus plan is on target--it finances the technology for windfarms and solar that we need to integrate into our economy.

As far as how we will spend time now that we can't finance the latest trivia from China, perhaps "education." We're the most dumbed down "advanced" nation in the world. We need to get our footing as a technologically advanced country back on track.

Also, we will have to get rid of indicators based on growth. There will have to be new measures of our societal progress and economy.

I read yesterday in our local NJ daily that applications to the state universities are running 10-20% above last year. Now if we educational institutions can just respond with the right curriculum....


Cher

[GeorgeGist]

17. The Japanese were wise ...

to save for the rainy day that the dead weight of capitalism guaranteed.