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Japan blazes a trail for living with stagnation and deflation

The Asian nation's so-called Lost Decade, which the U.S. may be mirroring, offers Americans lessons on the good (lower prices, cheap mortgages) and the bad (skimpy pay raises, little or no appreciation in home values).

December 02, 2010|By Don Lee, Los Angeles Times

Across the street, where Brooks Bros. once did business, the popular Uniqlo apparel shop now sells men's pullovers for $11 and fleece sweaters for $24.

The Toyoko Inn chain boasts of $80-a-night rooms that include breakfast. And downtown Tokyo pub manager Hiroto Matsuda slashed drink prices by half, to a little over $3 each, to keep up with the competition for salary-men customers.

"It's not that their incomes have gone up or down, it's because they don't know what's going to happen in the future," he said of his customers' reluctance to frequent watering holes after work.

The Lost Decade has taken an emotional toll as well. The number of Japanese suffering from depression, for example, has doubled in the last decade, with men in their 30s and 40s showing the highest rate, according to Japan's Welfare Ministry.

Yuki Honda, a professor at Tokyo University who has researched Japan's young adults, attributes a good part of this problem to the difficulty that workers — even graduates of top universities — have getting good permanent jobs.

"The Lost Decade made young people timid and afraid of what to do; it's made them even more risk-averse," Honda said.

The Japanese have coined a name for young men who prefer quieter, less competitive lives — soushokudanshi, or herbivore men.

Other Japanese are almost fatalistic about the future, believing that things will never get better.

Daigo Sato, 32, is too young to have memories of the earlier era when people were sprinkling gold flecks on sushi and thought nothing of spending thousands of dollars for the latest Gucci handbag.

"The economy has been the same ever since I graduated. I don't feel it's bad or worse, it's just the same," said the Osaka native, a college graduate who majored in history and has been working ever since as a salesman for a sake company.

Previously, he said, the stock market was alive. Now, "I have my money in stocks, and they haven't done anything in 10 years."

Hiroshi, the systems engineer, is old enough to remember the heady days when people talked about Japan as No. 1. Now, he said, never mind the U.S., Japan can't keep up with China and South Korea.

He knows it's not all bad; he said he can afford to buy things for his children, ages 8 and 10, that he never enjoyed as a child. But Hiroshi worried that the pressures of deflation have pushed too many companies, including his, to keep driving costs down by going overseas or lowering quality.

"What will my children do [for a living] when they grow up if everyone looks for cheap stuff? he asked.

Hiroshi hopes he can retire from his current company but has no illusions that his employer will keep him if sales fall. He isn't counting on his $300,000 home to appreciate. Nor does he expect Japan's pension to support him.

So Hiroshi and his wife skimp to sock away 10% of his salary. Like many others, Hiroshi's wife recently took a part-time job.

This year, for the first time in several, Hiroshi said he got a small raise. How small?

Enough for one extra beer a week — the special $3 kind.

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