Today, the New York Times has an excellent article about the economic decline of Japan and its implications for the US. I found this passage to be particularly interesting:

After years of complacency, Japan appears to be waking up to its problems, as seen last year when disgruntled voters ended the virtual postwar monopoly on power of the Liberal Democratic Party. However, for many Japanese, it may be too late. Japan has already created an entire generation of young people who say they have given up on believing that they can ever enjoy the job stability or rising living standards that were once considered a birthright here.

Yukari Higaki, 24, said the only economic conditions she had ever known were ones in which prices and salaries seemed to be in permanent decline. She saves as much money as she can by buying her clothes at discount stores, making her own lunches and forgoing travel abroad. She said that while her generation still lived comfortably, she and her peers were always in a defensive crouch, ready for the worst.

We are the survival generation,” said Ms. Higaki, who works part time at a furniture store.

Hisakazu Matsuda, president of Japan Consumer Marketing Research Institute, who has written several books on Japanese consumers, has a different name for Japanese in their 20s; he calls them the consumption-haters. He estimates that by the time this generation hits their 60s, their habits of frugality will have cost the Japanese economy $420 billion in lost consumption.

The author of the article, Martin Flackler, compares this current frugality with the conspicuous consumption of the 1980s, which he presents rather oddly, through various interviewees, as the norm. Anyone with the most cursory familiarity with post-war Japanese history knows that this period of extravagance associated with the real estate and stock market bubbles was an aberration, although it first manifested itself in the 1960s. Furthermore, as in the US, the UK and much of Europe, it was a direct consequence of Reagan's economic policies, which resulted in a hollowing out of manufacturing in the US through an overvalued dollar that effectively subsidized Japanese exports.

Of course, once Flackler has established the bubble years of the 1980s as the norm (much as many in the US have a similar misunderstanding about the bubble years of the late 1990s and early 2000s), the current refusal of many Japanese to consume at anywhere near that level becomes one of its problems, thus requiring a solution that is nowhere in sight. And, people like Higaki are the source of it, justifying the condemnation of Matsuda and, by extension, Flackler, as Matsuda is one of the people through whom he speaks. Given the severity of the situation, one wonders why he hasn't quoted someone to the effect that Japan should pass a law authorizing the government to seize any unspent savings at the end of the year. But if one goes too far in that direction, one discovers that people like Higaki have nothing to spend as they are, in her words, just surviving. It would appear that an old capitalist contradiction has risen to the surface, the excessive accumulation of capital that destroys the ability of the middle and lower classes to consume sufficiently to perpetuate economic growth. This is the real problem that Flackler fails to perceive, and a problem that has serious implications for the US as well.

Beyond that, there is also the possibility that young people in the member countries of the Organization for Economic Cooperation and Development, a good proxy for the developed world, have rejected the consumption practices that fueled the growth of the post-war era and subsequent bubbles. As noted by Yusef, the emergence of barter as an alternative to the use of money to obtain goods and services is arguably indicative of such a phenomenon. Or, consider how people under the age of 30 are seeking to sever their relationship with the automobile, the centerpiece of post-war global manufacturing production:

Selling cars to young adults under 30 is proving to be a real challenge for automakers. Unlike their elders, Generation Yers own fewer cars and don’t drive much. They’re likely to see autos as a source of pollution, not as a sex or status symbol.

They’re more apt to ride mass transit to work and use car sharing services -- pioneered by Zipcar -- for longer trips. And car sharing choices are expanding, with car rental firms moving into the market, making it convenient for young folks to rent with hourly rates and easy insurance. Connect by Hertz, for example, is rolling out its car sharing services in the New York metropolitan area, with plans to eventually expand them to around 40 college campuses nationwide.

If so, that would suggest that we are entering an era of regulated scarcity, one in which governments increasingly dictate the distribution of essential goods and services to the populace in response to deflation. Paradoxically, a movement by people towards more sustainability could initially provoke a governmental response of intensified, more authoritarian practices to deal with the unraveling of a social order centered around perpetual growth.

Labels: American Empire, Japan, Marxism, Neoliberalism, Sub-Proletarianization of America, Sub-Proletarianization of Europe