The New York Times (16/04, "Revival in Japan Brings Widening of Economic Gap" by Norimitsu Onishi) reports:

"Osaka, Japan – Japanese economy, after more than a decade of fitful starts, is once again growing smartly. Instead of rejoicing, however, Japan is engaged in a nationwide bout of hand-wringing over increasing signs that the new economy is destroying one of the nation’s most cherished accomplishments: egalitarianism.

"That view was once captured in the slogan, ‘100 million, all middle class society.’ Today, however, catch-phrases harshly sort people into ‘winners’ and ‘losers.’ Japan is now described as a ‘society of widening disparities.’ Major daily newspapers are running series on the growing gap between rich and poor.

"The moment of reckoning has come as the man given credit for the economic revival, Prime Minister Junichoro Koizumi, prepares to retire in September after more than five years in office. Mr. Koizumi’s Reaganesque policies of deregulation, privatization, spending cuts and tax breaks for the rich helped lift the national economy, but at a social cost that Japan’s more than 127 million residents are just beginning to grasp.

"Thanks to a growing economy and rising corporate profits, companies hired several hundred thousand more young Japanese for the start of the fiscal year on April 1. The broad Topix stock index closed recently on a 14-year high. Commercial land prices in the country’s three biggest metropolitan areas rose for the first time in fifteen years and high-rise luxury apartment buildings have kept sprouting across Tokyo.

"At the same time the number of Japanese without any savings doubled in the last five years, and the number receiving welfare payments or educational assistance have spiked by more than a third.

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

Private Schools as Gates to Success

"Mrs. 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 – that would raise her children’s chance of getting into good colleges and securing their future.

"‘I want to provide them with a good education that will allow them to choose from, say 10 different kinds of jobs,’ Ms. Terauchi said. ‘But I can only provide them with an education that will offer them three kinds of jobs.’

"Her husband works at a small company that makes time recording equipment. He leaves home at 8 am and returns after midnight on the last train. Most of the overtime he works goes unpaid. Mrs. Terauchi, who used to work at the same company, is now a homemaker.

"In Osaka, home to medium-size and small businesses that have yet to bounce back from the long economic downturn, nearly 28% of school children receive, based on household income, about $500 in annual aid provided by Osaka and the national government. The similar statistic for Tokyo is 25%.

"The focus on the widening economic gap has put Mr. Koizumi on the defensive.

"‘I don’t think it’s bad that there are social disparities,’ he said in Parliament,’ explaining that he favored a ‘society that rewards talented people who make efforts.’

"Mr. Koizumi appeared to soften his position – somewhat. ‘Winner and losers shouldn’t be trapped in those categories. If someone loses once, he should be given a second chance.’

"From a highly stratified prewar society, Japan was transformed into a nation where companies famously offered lifetime employment and promoted employees according to seniority, not performance. Eventually, Japan just did not have the means to practice this form of paternalistic capitalism.

"Critics say that though some changes under Mr. Koizumi were necessary, others went too far in favoring the rich at the expense of the average Japanese. Even as many companies abandoned lifetime employment, laid off employees and began tying promotion to performance, Mr. Koizumi lifted most restrictions against hiring temporary workers. Critics say these workers are a growing under-class of Japanese, with permanently lower wages, few benefits and little chance of becoming full-time employees.

"Until a generation ago, in keeping with the belief that wealth must be redistributed, the highest personal income tax rate was 75%. It was gradually lowered to its current rate of 37% in 1999, before Mr. Koizumi took power. Under his government, the capital gains tax on sales of stocks was lowered from 20% to 10% in 2003, and inheritance laws were changed to make it easier to transfer large assets. Meanwhile, the government decreased health and pension benefits.

"‘It’s trickle-down theory,’ said Toshiaki Tachibanaki, an economist at Kyoto University, who argues that Mr. Koizumi’s policies have widened social disparities. ‘Rich people should be helped so they will contribute to the economy.’

"The government says that the aging population, more than anything else, has caused income gaps. But critics say aging alone does not account for the sweeping changes since 2000, the year before Mr. Koizumi became prime minister.

"In that period, in a country famous for its savers, the numbers of households reporting no savings doubled to 24% – the highest figures since the early 1960s. And the number of households receiving welfare payments rose by more than 37% to more than a million households.

"Mr. Yamada, a sociologist, says the disparities are sharpest among the Japanese in their 20s and 30s, 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% 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 afford to pursue other personal interests.

"Most troubling to many critics are the emerging inequalities in education. Private junior high schools, offering guaranteed access to a prestige private high school and high chances of getting into a top university, have been attracting increasing numbers of students in the last five years.

"To get into such a junior high school, a child usually attends a junior high school for three years through the sixth grade, at a total cost of about $20,000. Typically the father is a high-earning professional, while the mother is a homemaker who concentrates on the child’s schooling.

"Nearly 60% of the school’s students receive educational assistance, even though Osaka has raised the income threshold to qualify for it. Mr. Koido said that many of the children’s fathers had been laid off or shifted to lower-paying jobs in recent years.

"‘Some children are spending evenings alone because their mothers work at night,’ Mr. Koido said, explaining that students’ home environment had become problems in recent years. ‘They can’t focus in the classroom. They’re late, not just by minutes, but by hours.’

"Elementary and junior high school are mandatory and free in Japan. But Kotaro Tatsumi, 29, an official at a private welfare organization, said that even with educational aid many families struggled to pay for supplies.

"Miyuli Matsuda, an office worker receives school aid for her 10-year-old son. She and her husband, a cement truck driver, also have a 2-year-old daughter. Ms. Matsuda, 34, said that among families in her neighborhood both parents work. ‘I can tell that from the fact that very few parents show up for open school events,’ Ms. Matsuda said. ‘People said they could be fired if they take the time off.’

"‘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.’"

So in the process of ironing out the world’s rich texture of cultures to resemble Coca Cola ads, the world is left bleeding with gashes from the litter of broken bottles.

-- from Economic Reform, May 2006

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