Saturday, April 15, 2006

Rising inequality in Japan

Maximum marginal tax rates in Japan are now comparable to those in the US. Lifetime employment by large corporations is a thing of the past, and expensive private schools are the ticket to success. Sound familiar? Egalitarianism has been replaced by kachigumi and makegumi ("the winning team" and the "losing team"). Previously discussed here.

NYTimes: Today, in a country whose view of itself was once captured in the slogan, "100 million, all-middle class society," catchphrases harshly sort people into "winners" and "losers," and describe Japan as a "society of widening disparities." Major daily newspapers are running series on the growing gap between rich and poor, with such titles as "Divided Japan" and "Light and Darkness."

...Mayumi Terauchi, 38, began receiving education aid when her 7-year-old son, Yuuki, started school last year, to help bear the costs of the backpack, cafeteria lunches and other necessities not covered in public schools. She frets that his place and that of her 1-year-old daughter, Natsumi, are already fixed in the new Japan of winners and losers.

Ms. Terauchi sees a "huge gap" in quality between public and private schools here in Osaka. But she and her husband cannot afford the private schools, or even the cram schools — for-profit supplemental programs — that would raise their children's chances of getting into good colleges and securing their future.

...Until a generation ago, in keeping with the belief that wealth must be redistributed, the highest personal income tax rate was 75 percent. It was gradually lowered, to its current rate of 37 percent in 1999, before Mr. Koizumi took power. Under his government, the capital gains tax on sales of stocks was lowered from 20 percent to 10 percent in 2003, and inheritance laws were changed to make it easier to transfer large assets. Meanwhile, the government decreased health and pension benefits. a country famous for its savers, the number of households reporting no savings doubled to 24 percent — the highest figure since the early 1960's. And the number of households receiving welfare payments rose by more than 37 percent to more than a million households. From 2000 to 2004, the number of schoolchildren receiving aid rose by 36 percent to almost 13 percent of elementary and junior high school students.

...Mr. Yamada, the sociologist, says the disparities are sharpest among Japanese in their 20's and 30's, among whom two groups have emerged: full-time employees and permanent temporary workers.

"The reason that there are no riots in Japan as in France is that most of these young people live with their parents," Mr. Yamada said, pointing out that even 12 percent of Japanese between the ages of 35 and 44 lived with their parents in 2004. With free housing and food, those with temporary jobs can still afford to pursue personal interests.

..."I wonder what kind of country Japan is becoming if you're told you're either a winner or loser," she said. "I don't want to be either. I just want to lead an average life."

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