Prosperity puts Japan’s classless society at risk

Press, 28 January 1988, Page 12

Prosperity puts Japan’s classless society at risk

The “Economist’s” Tokyo correspondent reports

Ask Japanese which class they belong to and nine out of ten say “middle.” The American occupation softened Japan’s rigid class structure; since then the country has achieved one of the world’s most equal distributions of wealth. The result has been social harmony, a low crime rate and few slums. It has helped the economy by boosting demand for consumer goods, which in turn encouraged the Japanese talent for mass production; and, by making education universally affordable, it has helped produce a well-trained workforce. These benefits may now be at risk. The post-1945 narrowing of both income and wealth gaps seems to be going into reverse. In 1969 the average income of the top fifth of Japanese was 4.1 times that of the bottom fifth (compared with 9.5 for America). By 1986 the Japanese figure had risen to 4.6 The biggest reason for the change is the sharp rise in land

prices, which makes a lot of Japanese instant millionaires when they sell their property. The new money is being flaunted in Tokyo and other big cities. Those left behind, wageearners unable to buy homes of their own, are conscious of having slipped. In the early 1970 s some two-thirds of those who said they were middle-class thought of themselves as “middle-middle-class”; now only half do. Fifteen years ago only a quarter claimed membership of the lower-middle class; now a third do. Controlling land prices and reducing the tax burden on wage-earners have become political issues in a country long mostly apolitical. The Japanese see being middle-class as meaning that you are frugal and diligent. To be a member of the small lower-class means you are a pariah. Being up per-class is to be one of the idle rich: a 1986 poll found that 70 per cent of Japanese thought the rich were wastrels.

In fact Japanese are savers, and like to put their savings into land, which already locks up 60 per cent of the country’s wealth. As it rises in value it will make its owners wealthier — and, to the groans of its trading partners, Japan even more abstemious. Middle-class unity may be under another threat as Japan’s economy becomes less of a manufacturing and more of a service one. Manufacturing is spread around the country, and wages are about the same in different industries. Service jobs are concentrated in the cities, and the range of incomes is much larger. Retailers earn far less than software writers, but both compete for housing in the same city. When the workers become pensioners, some will have been able to provide for themselves better than others. Japan’s greying society faces the spectre of an idle poor. Copyright—The Economist.