The Daily Yomiuri reports that the Japanese savings rate is converging toward the US savings rate, which is approximately zero. The incredible willingness of Japanese to defer present satisfaction in favor of investment in productive capacity was one of the major factors in their rapid economic growth from an impoverished nation as recently as the end of World War 2 into one of the world’s wealthiest nations.
In my view a high savings rate within a nation or ethnic group is a form of what Sowell would call “cultural capital”, and is an enduring source of prosperity for those people. In the same way that physical capital can be consumed or wasted, cultural capital can be squandered if people are repeatedly penalized for their good traits. Over time they will be retrained, in this case, to favor consumption over savings.
Japan’s monetary policies produced a bubble (which discourages savings by the appearance that savers are suckers and that you can get rich quick through financial speculation) followed by ten years of Keynesian fiscal stimulus spending projects that wasted the nation’s vast savings on boondoggle projects.
The article does start to inquire in this direction:
- “Now, people in the baby-boomer generation are among those who have to reduce the amount they save.”
- (RB: the new generation has been trained not to save because the rewards of savings have been destroyed).
“It also has been said that Japanese households’ strong propensity for saving reflects householders’ decision to make their own arrangements for their future security because social welfare systems are incomplete. This theory now seems less than convincing as the country’s social welfare system has improved, no matter how superficially.”
(RB: Why save if big brother will take care of you?)
“Prevailing in Japan once was a theory that also related the high savings ratios and high growth rates to the Confucian respect for hard work and thrift. Have the Japanese people then changed their characteristics due to the protracted economic slump?”
(RB: When the rewards for hard work and savings flow into holes in the ground and political pork, after a while people will learn not to do it.)
