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Japan Why It Works, Why It Doesn't

Japan Why It Works, Why It Doesn't: Economics in Everyday Life

James Mak
Shyam Sunder
Shigeyuki Abe
Kazuhiro Igawa
Copyright Date: 1998
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  • Book Info
    Japan Why It Works, Why It Doesn't
    Book Description:

    This collection of twenty-six essays furnishes concise explanations of everyday Japanese life in simplified economic terms. They begin with such questions as, Do Japanese live better than Americans? Why don't Japanese workers claim all their overtime? Why don't Japanese use personal checking accounts? Why do Japanese give and receive so many gifts? The essays are written in non-technical, accessible language intended for the undergraduate or advanced placement high school student taking an economics course or studying Japan in a social science course. The general reader will find the book a fascinating compendium of facts on Japanese culture and daily life.

    eISBN: 978-0-8248-6305-0
    Subjects: Economics, Anthropology, History

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
    (pp. ix-xii)
    (pp. xiii-xv)
  5. [Map]
    (pp. xvi-xvi)
  6. Living

    • 1 Do the Japanese Live Better Than Americans?
      (pp. 3-10)
      Charles Yuji Horioka

      Gross domestic product (GDP) per person is a common measure of a country’s standard of living. It is simply the total value of all final goods and services produced in a certain economy within a given period of time (usually one year); per capita GDP is GDP divided by population.

      In 1995, the per capita GDP of Japan was 3,830,700 yen while the per capita GDP of the United States was 26,438 dollars.¹ The Japanese number is larger, but it is stated in Japanese currency. The two figures can be meaningfully compared only if they are both stated in the...

    • 2 Why Avoid the Altar?
      (pp. 11-20)
      Andrew Mason and Naohiro Ogawa

      The decline in marriage and the disintegration of the traditional family are some of the most widely discussed changes affecting U.S. society. By comparison, Japan seems to be a country of remarkable social stability. But surprisingly, the status of marriage is changing even more rapidly in Japan than in the United States and men and women are marrying even later. In 1995, 66 percent of men and 49 percent of women in their late twenties were single. In the United States, the corresponding figures (in 1990) were 46 percent for men and 32 percent for women. Singaporeans and Japanese now...

    • 3 Why Go to School after School?
      (pp. 21-26)
      Shigeyuki Abe and Kazuhiro Igawa

      In Japan, it is not unusual to see groups of young schoolchildren riding trains or walking along city streets as late as 10 p.m. on school days. What are these young people doing out so late? They are going home, tired after spending long evening hours at their after-school private cram schools known asjuku. They can often be seen buying vitamin-enriched stamina drinks, a product initially targeted at exhausted “salarymen” (the Japanese term for male office workers) seeking a quick energy recharge.

      The Ministry of Education (Monbusho) reported that in fiscal year 1993, 36.4 percent of elementary and junior...

    • 4 Why So Many Gifts?
      (pp. 27-32)
      Robert Parry

      The doorbell rings; you open the door to receive a beautifully wrapped parcel from one of Japan’s prestigious department stores. What is it? Excitement fills the air as you carefully remove the wrapping paper—nobody tears open parcels in Japan—to reveal … several months’ supply of laundry detergent. Congratulations! You are at the receiving end of the Japanese custom of giving seasonal gifts.

      The Japanese also give presents when they travel, and on other special occasions. Larger stores in Japan have sections devoted solely to gifts. At tourist destinations around the globe, you also see many Japanese buying presents....

    • 5 Why Is Pachinko So Popular?
      (pp. 33-38)
      Shigeyuki Abe and James Mak

      Pachinko, the Japanese version of the pinball machine, is one of the most popular leisure activities in Japan. Fifty percent of the Japanese have played it. In 1995, over 28 million Japanese played pachinko, an average of nearly twenty-five times during the year. Foreigners, seeing the Japanese sitting for hours in front of pachinko machines, often wonder what is so fascinating about this seemingly repetitive and monotonous game, and many Japanese would agree with that sentiment. Nonetheless, pachinko is big business in Japan.

      There are over 18,000 pachinko parlors across the country, with 4.6 million pachinko machines. Pachinko parlors are...

    • 6 Why Are the Japanese Obsessed with Luxury Brand-Name Goods?
      (pp. 39-44)
      Kazuo Nishiyama

      Japanese tourists abroad are welcomed by shopkeepers because of their notorious free-spending sprees at famous boutiques and duty-free shops. They are more likely to choose a product based on brand recognition than on price. They don’t buy just any brand names, but only those that are recognized and valued at home.

      Americans watching Japanese tourists shop in New York or Honolulu are often amazed by the Japanese obsession with brand-name luxury goods. At 7:45 a.m. one morning, before any stores were open for business, a young Japanese office lady (OL—a Japanese name for female office workers, the majority of...

    • 7 Why Are There So Many Small Shops in Japan?
      (pp. 45-50)
      James Mak and Shyam Sunder

      Strolling around Motomachi in Kobe and along Shinsaibashi-suji in Osaka or near Kawaramachi-dori in the historic Imperial capital of Kyoto, a visitor to Japan is impressed by the large number of small specialty shops and restaurants that line the streets. Surely, Japan must be a nation of small shopkeepers.

      Despite the country’s high prices, one of the most enjoyable activities for visitors to Japan is shopping, or at least “window shopping.” The Japanese also love shopping. On any Sunday in any of Japan’s cities, you can barely make your way through the throngs of people on its “shopping streets.” Best...

    • 8 How Do the Japanese and Americans Spend Their Money?
      (pp. 51-58)
      James Mak

      Japanese and American households use their incomes very differently in terms of amounts of savings and ways to spend money.

      First, Japanese households save a larger percentage of their after-tax incomes than American households do—14.7 percent versus 4.2 percent, respectively (see chapter 16). Americans might find those numbers hard to believe if they’ve ever seen Japanese tourists in the United States buying up Gucci bags, Calvin Klein jeans, and everything in sight with famous, and usually European, brand names (see chapter 6). These tourists also shop in stores most Americans would feel too intimidated even to walk into.


    • 9 How Can the Japanese Manage without Personal Checking Accounts?
      (pp. 59-66)
      Toshiki Jinushi and James Mak

      In Japan, don’t expect to pay your bills by check. There are no personal checking accounts! Businesses can have checking accounts, but not individuals (except for a few very wealthy individuals). You’ll have to find some other way to pay for your purchases. What if you want to pay for a magazine subscription? One option is to go to any of the 24,500 post offices (which, by the way, are not open on Saturdays) and instruct the postal service to pay the magazine publisher’s account at the postal service. Of course, you have to pay the magazine subscription price plus...

    • 10 What Are Most Japanese Doing on Tax Day?
      (pp. 67-70)
      Robert K. McCleery

      Answer:Definitelynotworking on their tax returns.

      Each year the Internal Revenue Service (IRS) sends out nearly 8 billion pages of forms and instructions to nearly 100 million American taxpayers. If placed end to end, those pages would circle the Earth nearly twenty-eight times.

      What do Americans hate most about meeting the April 15 deadline for filing their personal income tax returns? For most people, it’s the stress that comes from having to sort out and work through piles of disorganized receipts (if you can find them!), reading incomprehensible instructions and forms, and struggling with distasteful math. A recent...

  7. Work

    • 11 Why Do Students Take It Easy at the University?
      (pp. 73-82)
      Shigeyuki Abe, Shoji Nishijima, Shyam Sunder and Karen Lupardus

      Japan has one of the highest literacy rates in the world. Its industrious and educated labor force accounts for the high volume, variety, and quality of its industrial products, and are the base of its postwar economic success. Yet most Japanese university students consider their colleges and universities merely as four-year playgrounds. Why?

      Japan’s Ministry of Education (Monbusho) oversees an egalitarian primary and lower secondary public education system by exercising its broad authority over school curriculum, teaching manuals, and school texts. Admission to coveted schools is determined almost entirely by once-a-year competitive entrance examinations at junior and senior high school...

    • 12 Why Do Japanese Companies Hire Only Spring Graduates?
      (pp. 83-90)
      Teruyuki Higa

      New graduates pour forth from Japanese universities in March of each year and officially begin their employment in April. This phenomenon is also the culmination of several months of concentrated, large-scale hiring efforts of Japanese companies and governments. Only the most fortunate, best graduates are hired by the large, well-established companies or enter civil service and enjoy virtual lifetime employment. The less lucky, if they do find a job, are hired by smaller companies that do not have the resources of the larger and governmental employers, and are therefore less likely to find desirable lifetime employment. A few stragglers, usually...

    • 13 Why Don’t Workers Claim All Their Overtime?
      (pp. 91-98)
      Teruyuki Higa and Karen Lupardus

      Japanese workers have a reputation for working long overtime hours. Curiously, they don’t usually ask to be paid for all the extra hours they work. Imagine an employee who leaves the office one night at 11 p.m., six hours after the normal quitting time. Allow an hour for dinner. If the employee claims three hours of overtime, the remaining two hours would be considered “service overtime,” or unpaid overtime. Imagine now that it is not just one employee, or an occasional night at the office, but that it is a regular routine for many Japanese workers—two-fifths of them, as...

    • 14 How Do Workers Get Paid?
      (pp. 99-106)
      Naoki Mitani

      A midsummer visitor to Japan will be impressed by the throngs of people in boutiques and department stores shopping for presents. Japanese shoppers are observing their custom of buying midyear gifts for customers, supervisors, and others of higher rank to show their appreciation (see chapter 4).

      Shoppers also spend a lot of money buying things—especially big-ticket items—for themselves. Travel agencies do a booming business selling package tours to domestic and foreign destinations at peak-season prices. This frenetic shopping just happens to coincide with the time of year when Japanese workers receive one of their large semiannual bonuses. They...

    • 15 Do the Japanese Work till They Drop?
      (pp. 107-114)
      Yoshitaka Fukui

      The stereotype of the Japanese male worker is the workaholic who spends long hours at work, frequently works on weekends, and hardly ever takes a long vacation or spends much time with his family. Some are believed to die suddenly from overwork(karōshi). Indeed, each year about five hundred families file workmen’s compensation claims forkarōshi, although only about 5 to 7 percent of these claims are ultimately approved by the government. Some families have also filed lawsuits against employers alleging their relatives were worked to death. Anecdotes of long work hours abound, but I don’t believe that they accurately...

    • 16 Why Do the Japanese Save So Much?
      (pp. 115-120)
      Charles Yuji Horioka

      According to official government statistics, Japanese households saved one-sixth of their after-tax incomes on average between 1960 and 1994. In some years the savings rate was almost one-fourth of their incomes. By contrast, American households saved a modest 7.1 percent of their incomes on average during the same period. Thus, the savings rate among Japanese households appears to be more than twice that of American households and nearly 10 percentage points higher. The government statistics suggest that the Japanese are much bigger savers than Americans. Is this really true?

      Comparing official statistics on household savings from different countries can yield...

  8. System

    • 17 Why Is Japan a Paradise of Vending Machines?
      (pp. 123-130)
      Robert Parry

      Hike to some of Japan’s oldest Buddhist temples secluded among dense alpine forests, stroll along the shores of Okinawa’s coral islands, or indeed go anywhere in Japan and it soon becomes clear that, regardless of all the clichés and stereotypes about the country, Japan should actually be known as the paradise of vending machines on Earth. Indeed, there are so many machines that they soon blend into the landscape and get taken for granted as a part of everyday life.

      Apart from the enormous number of machines selling soft drinks and cigarettes, it is also possible to buy alcohol, candy...

    • 18 Why Do Doctors Prescribe So Many Pills?
      (pp. 131-136)
      Akihiko Kawaura and Sumner J. LaCroix

      A visit to the doctor in Japan is rarely complete until the doctor has prescribed large amounts of medicine to treat the patient’s condition. Chances are good that the patient will leave the doctor’s office with several prescriptions. It is relatively common to see a patient receiving as many as four to five kinds of pills, packets, and capsules to take three times a day. Why do Japanese doctors prescribe so many drugs? It is certainly not because Japanese patients have a peculiarly high demand for medicine. The answer is likely to be found by focusing on the behavior of...

    • 19 Why Do Bank Automatic Teller Machines Shut Down at 7 p.m.?
      (pp. 137-148)
      Shyam Sunder

      The day after I arrived in Kobe, Japan, in May 1995, I opened a bank account. My English-speaking secretary patiently explained to me the routine rules of banking. She informed me that the weekday service hours of the bank’s automatic teller machines (ATMs) are as follows:

      Japan has been a leader in both the development and adoption of ATM technology. From 1969 to 1995, private banks in Japan installed about 105,000 machines. In addition, the Postal Savings Office (see chapter 22) has about 23,000 machines. In 1975, private banks started a joint venture company called Nippon Cash Service to allow...

    • 20 Why Is Rice So Expensive in Japan?
      (pp. 149-156)
      Susumu Hondai

      The Japanese written character for “rice”(gohan)is the same as for “food.” Surprisingly, this staple of the Japanese diet is far more expensive in Japan than in the rest of the world. In 1995, the producer and retail prices of rice in Japan were 9.4 and 3.4 times the respective prices in the United States. In February 1996, 10 kilograms (22 pounds) of high-quality nonglutinous rice sold at an average retail price of 5,585 yen, or, roughly 56 U.S. dollars. That price was two and a half times as expensive as the ultrapremium short-grain rice sold in Honolulu at...

    • 21 How Can the Japanese Spend So Little on Health Care?
      (pp. 157-166)
      Matthew Loke and James Mak

      Many Americans are unhappy with the U.S. health care system but they do not agree on how it should be reformed. Americans cherish their personal choice of high-quality health care but are unhappy with unequal access and soaring costs. The Clinton administration’s effort in 1994 to get Congress to pass its health care bill generated heated political debate but little action. Cost of medical care in the United States rises at the fastest rate among industrialized countries. Yet, 15 percent of Americans, including 10 million children, have no health insurance.

      By contrast, everyone in Japan is covered by health insurance....

    • 22 How Does Japan’s Largest Bank Work?
      (pp. 167-172)
      Toshiki Jinushi

      According toFortunemagazine, the three largest banks in the world in 1995 were Dai-Ichi-Kangyo, Tokyo-Mitsubishi, and Sakura. Not many outside Japan know of an even bigger bank—the Japanese Postal Savings Office (PSO). With its deposits of over 200 trillion yen (2 trillion U.S. dollars) in mid-1995, PSO is much larger than the three largest banks in the world combined. And its share of Japanese deposits has been rising.

      The PSO has 24,500 branches throughout Japan. Being part of the Japanese Ministry of Posts and Telecommunications, every post office in the country doubles as a branch of this bank....

    • 23 Why Do So Many Japanese Contribute to Public TV?
      (pp. 173-178)
      Kazuhiro Igawa and James Mak

      In Japan, public radio and television broadcasts are provided by a semipublic monopoly popularly known as NHK (Nihon Hoso Kyokai), the Japan Broadcasting Corporation. As in public broadcasting in the United States, NHK does not air commercials and thus receives no revenue from that source. But NHK and public television in the United States have some important differences, one of the most striking being the difference in funding base.

      There are over 400 independent public radio stations and about 350 local public television stations in the United States. Funding for public broadcasting comes largely from government subsidies, corporate and charitable...

    • 24 Why Are So Few People on Welfare in Japan?
      (pp. 179-184)
      Yoko Kimura

      In January 1995, the Great Hanshin Earthquake struck Kobe City and the surrounding areas, killing more than six thousand people and making more than three hundred thousand people homeless. Yet news reporters covering the disaster noted that large numbers of households that qualified for disaster relief refused to apply for public assistance. Why are the Japanese reluctant to seek public assistance?

      Japan imposes stringent qualification rules on welfare recipients. In 1995, while still caught in the grips of the country’s worst and longest economic recession since World War II, less than 1.5 percent of all households and 0.7 percent of...

    • 25 What Are Keiretsu and Why Do Some U.S. Companies Dislike Them?
      (pp. 185-194)
      Gary S. Kikuchi

      General Motors, General Electric, General Tire, and General Dynamics are well known U.S. corporations. Similarly, Mitsubishi Bank, Mitsubishi Corporation, Mitsubishi Heavy Industries, and Mitsubishi Motors are well known Japanese business firms. Some corporations share the same name because they share a common history (e.g., Westinghouse Electric and Westinghouse Air Brake). Others share the same name by coincidence (e.g., American Airlines, American Express, and American Fence) and may even do some business with each other, but are not affiliated. In contrast, the four Japanese corporations that share the Mitsubishi name, even though they are not in the same line of business,...

    • 26 Is Japan an Egalitarian Society?
      (pp. 195-204)
      Harry T. Oshima

      Early one morning while walking in Shinjuku, Tokyo, I saw cops waking up the homeless sleeping on the sidewalk in front of a big department store. The cops ordered them to pick up their blankets and cardboards and get moving. Apparently, the homeless were allowed to sleep there during the night but at the crack of dawn they were supposed to disappear.

      Japan had large numbers of poor people before World War II, but their number fell dramatically after the war. The number of poor households dropped from 33 percent of the total in 1963 to only 5 percent in...

    (pp. 205-208)
    (pp. 209-210)
    (pp. 211-214)
  12. Index
    (pp. 215-219)