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The Japanese Economic Dilemma

Hardly a day goes by without some “expert” on Japan giving an opinion about the reasons that the country has wallowed in economic malaise for close to fifteen years. All of these reasons sound quite logical: The financial excesses of the 1980s caused the Japanese economy to overheat, leading to the “bubble economy” and when it burst in 1990 it was a disaster. The outlandish housing prices resulted in banks overextending credit to unqualified borrowers in a way that was much worse than the Savings and Loan debacle in the US: whereas that amounted to, at most, a $500 billion loss, the Japanese equivalent reached $2 trillion. And while in America we have a tendency to just shrug and write off losses, in Japan there is a social contract that requires that everyone take responsibility for their actions. So dealing with the wreckage from the collapse of the bubble economy has been a slower and more painful process.

This sounds reasonable, does it not? However, it is wrong. What happened in Japan was far worse, and the fact that no one is addressing the real root cause of Japan’s predicament does not bode well for the future. So let’s turn a clear eye on the subject.

In the May issue of The Atlantic magazine there was an article by Ethan Devine entitled, “The Slacker Trap: Japan’s 1990s bust permanently undermined the country’s workforce and corporate culture. America should take notice.” It details the harrowing experience of young people in Japan who have been unable to find steady work since the bubble burst.

Devine recounts the ordeal of Hiroki Iwabuchi, who used a Sony camcorder to document his life in a film he entitled “Freeter’s Distress.” “Freeter” is roughly translated in the article as “slacker,” and many Japanese looked down on Iwabuchi as someone who was merely lazy and that is why he could not find a real job to turn into a career.

But Iwabuchi is not alone: Devine says that those original freeters are now in their late 30s and early 40s. Practically a third of them do not have regular employment. A fifth still live with their parents. According to Devine, In 1992 80 percent of young Japanese workers had regular jobs. By 2006, half were temps.


Iwabuchi is typical. He was unable to find a job when he graduated from college at 23, and signed on with an employment agency that sent him to a Canon factory two hours from Tōkyō. He would spend nine hours doing menial work, then go to his company apartment to eat a dinner of ramen before going to bed. The next day he would repeat the whole process.

However, the money that he earned was not enough to live on, so he had to take other temporary work that the agency would send his way. He would earn enough to buy a meal at McDonald’s, then pay $10 to sleep in a chair at an internet café. By the end of the weekend he would have just enough money to take the train back to his apartment.

What is the lesson to be learned from this? Devine says that while America is emerging from its own economic problems, and thinking that the worst is behind us, there are other concerns. We should consider the following:

But we should spare a thought for our friends across the Pacific―not just for their sake but for ours as well. No one knows why Japan’s economy never fully recovered, but some economists are starting to trace the problem to young people like Iwabuchi who cannot find good jobs, don’t learn new skills, and neither earn nor spend enough to help the economy get moving. That generational problem, while far more advanced in Japan, is not unlike our own.

And here is the real danger that Devine sees:

Japan’s example raises the stakes for America as it struggles to contain the Great Recession’s damage. Even if it rains jobs tomorrow, America’s current bout of high unemployment is already the longest in its postwar history. And youth unemployment is twice the national average. Japan’s experience highlights the risk that this generation might end up so utterly lost, it will set off a cycle of economic decline―one that quashes the chances of generations to come.

Naturally, Devine offers much more analysis and suggests a number of steps that should be taken to stabilize conditions. (Such as passing budgets in a timely manner.) He points out that retraining for other employment is critical. (Iwabuchi finally got that training seven years after he made his video. He is now providing low level care at a nursing facility.)

But the implications of Devine’s work are disturbing. It is highly recommended that this article be sought out and read in its entirety. Try visiting the website, THEATLANTIC.COM.

Those who wish to comment on the opinions expressed here may send their thoughts to info@GoWizardry.com. The most interesting responses will be addressed in future postings.

Robert J. Terry

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