‘happiness’ in the post-wwii japanese economic development ― in search of the new goals of...

‘‘Happiness’ in the Post-WWII Happiness’ in the Post-WWII Japanese Economic Development Japanese Economic Development

― In Search of the New Goals of Development ―― In Search of the New Goals of Development ―

August 2011

Shigeru T. Otsubo & Yumeka Hirano GSID, Nagoya University

(http://www.gsid.nagoya-u.ac.jp/sotsubo/) 1

Four Phases of Japanese Economic Development

Phase I (1945-1960s)Catching-up Process

1. Post-war Rehabilitation & Economic Reforms (1945-mid 1950s)2. High Economic Growth Period (mid 1950s – early 1970s)

DemocratizationCommon Goals

Phase II (1970s-1980s)Failure to Reform

& “Bubble” Economy

1. End of Catch-up Process & Need to Change (1970s1980s)2. Overcoming Oil Crises (1970s )3. ‘Bubble’ (latter ½ of 1980s)

No More Common GoalsAutonomous Actions

Phase III (1990s-2009)Long Stagnation

& Koizuminomics

1. Bubble Burst (1990) & Long Stagnation (1990s-2000s)2. Koizuminomics Supply-Side Policies & Widening Inequality (2001-2006-)

Phase IV (2009-)Political Regime Change,

3.11 and Beyond

1. First Regime Change through Election LDP+ DP+ (2009)2. 3.11 & Fukushima

In Search of New Goals

Socio-Economic Outcome (-1970-)

Environmental IssuesSocial Dimensions NNW(1973)

2

Part I.2: High Economic Growth Period Part I.2: High Economic Growth Period

(mid 1950s – early 1970s)(mid 1950s – early 1970s)

Phase I (1945-1960s)Catching-up Process

1. Post-war Rehabilitation & Economic Reforms (1945-mid 1950s)2. High Economic Growth Period (mid 1950s – early 1970s)

DemocratizationCommon Goals

3

Dual structure -- lower productivity and poorer working conditions in small businesses, consumption-goods and service sectorsNational consensus -- trickle-down strategy

8.8 9.2

4.5 4.4 3.34.9

1.5 1.0 1.4

11.1

02468

1012

1956

-60

1961

-65

1966

-70

1971

-75

1976

-80

1981

-85

1986

-90

1991

-95

1996

-200

0

2001

-200

5

Average realgrowth rate

Source: National Accounts

Entering Virtuous CycleEntering Virtuous Cycle

Period of rapid growth (1955--1970)

4

3 Sacred Treasures in the latter half of 1950s

3 Cs in the High-growth period of 1960s

1956 Economic White Paper “We have come out of the post-war rehabilitation.”

1964 : Tokyo Olympic Game, OECD Membership, IMF Article 8 Country

TOYOTA Corolla (1966-) vs. NISSAN Sunny (1966-)1000cc 1000cc1100cc affluence of plus 100cc 1200cc neighbor’s car looks smaller

Drive to Material Happiness/Affluence

5

Negative Outcome of the Rapid Growth Negative Outcome of the Rapid Growth (2) Environmental degradation(2) Environmental degradation

00.010.020.030.040.050.060.07

1965

1970

1975

1980

1985

1990

1995

2000

2004

SO2(ppm)NO2(ppm)

Atmospheric polutionSO2(ppm)

Source: Ministry of Environment

Sulfur Dioxide (SO2) Yokkaichi-city Asthma

6

20

40

60

80

100

1975

1980

1985

1990

1995

2000

2004

Lakes

Rivers

Water pollution% of attaining environmental standard


7

010,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000

1970

1975

1980

1985

1990

1995

2000

2005

0

500

1,000

1,500

2,000

2,500

3,000Atmospheric pollutionrelated disease (left)

Minamata disease (right)

Number of patients


Minamata Diseasecaused by mercury poisoning

8

1973 Net National Welfare (NNW) 国民純福祉　　　　　NNW = GNP + Monetary Value of Leisure Hours + Monetary Value of Housework - Costs of Preserving Environment - Imputed Damage by Pollution - Losses due to Urbanization (traffic accidents, longer commuting hours)

NNW ナニガナンダカワカラナイ　　

Not Understood. Not Accepted. Disappeared in a few years.

Japan’s Indicators for Well-being

First Wave of Well-being Metrics in the 1970s 1

9

1974 Social Indicators (SI) 　社会指標　　　　　 10 Social Objectives 1. Health 2. Education/Learning 3. Employment and the Quality of Working Life 4. Leisure 5. Income/Consumption 6. Material Wealth/Stock 7. Crime and Law Enforcement 8. Family 9. Quality of Community Life 10. Social Class and Inter-class Mobility

1979 Social Indicators (SI) 　新版社会指標

　　　 Few adjustments over the 1974 social indicators. For example, secure supply of Energy and Water is added as a subcategory under item 6.


First Wave of Well-being Metrics in the 1970s 2

10

Phase II: End of Catching-Up ProcessPhase II: End of Catching-Up ProcessBubble Economy Bubble Economy

(1970s – 1980s)(1970s – 1980s)

Phase II (1970s-1980s)Failure to Reform

& “Bubble” Economy

1. End of Catch-up Process & Need to Change (1970s1980s)2. Overcoming Oil Crises (1970s )3. ‘Bubble’ (latter ½ of 1980s)

No More Common GoalsAutonomous Actions

11

Bubble Creation & Bubble BurstBubble Creation & Bubble Burst

Financial Affluence -- Mirage ? 12

Phase III.1: Lost Decades Phase III.1: Lost Decades (1990s – 2000s) (1990s – 2000s)


& Koizuminomics


13

Average annual growth rate

1956～ 60 8.8%1961～ 65 9.2%1966 ～ 70 11.1%1971～ 75 4.5%1976～ 80 4.4%1981～ 85 3.3%1986～ 90 4.9%1991～ 95 1.5%1996 ～ 20001.0%2001～ 05 1.4%

Source: ESRI, Cabinet Office, "Annual Report on National Accounts“Note: data after 1995 is based on chain-linking method, 2000 price.

Note: data before 1980 are based on the 1968-based SNA.

0.21.1

1.92.6

1.4

- 1.8

2.9

0.1

1.82.32.6

6.8 5.35.23.4

1.00.4

- 0.2

-4

-2

0

2

4

6

8

10

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

% GDP growth rateNominal growth

Real growth

Burst of Bubble and the Burst of Bubble and the ‘‘Lost Decade(s)Lost Decade(s)’’

14

Source： OECD　“Economic Outlook 79”(June 2006）

General government budgetbalance （% of GDP）

- 5.2- 7.9- 7.5

- 5.9- 5.1

- 4.2

0.82.10.3

- 4.7

- 10- 8- 6- 4- 2024

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Cyclical balance

Structural balance

Budget balance

％

Projected

Deterioration of the government fiscal balanceDeterioration of the government fiscal balance

15


Second Wave of Well-being Metrics : 1986

1986 New Social Indicators (NSI) 　国民生活指標　　　　　　　　　　 8 Indicators for Different Aspects of Life 1. Health 2. Environment and Safety 3. Economic Stability 4. Family Life 5. Working Life 6. School Life 7. Community/Social Activities 8. Learning/Cultural Activities+ Subjective Indicators 1. Satisfaction 2. Happiness 3. …

16


Second Wave of Well-being Metrics : 1992

1992 People’s Life Indicators (PLI) 　新国民生活指標　　　　　　　　　　　‘ Well-being Indicators’ 「豊かさ指標」

8 Indicators for Different Aspects of Human Activities 1. Live 2. Consume 3. Work 4. Raise (Children) 5. Healing 6. Play 7. Learn 8. Socialize+ 4 Indicators of Life Evaluation 1. Safety/Security 2. Fairness 3. Freedom 4. Comfortability

Evaluated and implicitly ranked 47 prefectures of Japan.1st : Fukui (relatively underdeveloped pref.)Last: Saitama (next to Tokyo, relatively developed/urbanized pref.) With complaints from low-ranked prefectures, PLI was discontinued after a few years (private firms succeeded the similar RANKING).

17

Phase III.2: Phase III.2: Koizuminomics Supply-Side PoliciesKoizuminomics Supply-Side Policies

(2001 – 2006-) (2001 – 2006-)


& Koizuminomics


Structural Reforms in theStructural Reforms in theJapanese Development Model Japanese Development Model

18

1986: Worker Dispatch Law

1999: Job lines for dispatched workers were liberated (excl. manufacturing).

2004: Manufacturing sector included

Source: e-Stat Database of the Japanese Government Statistical Office

19


21

Change in policy formation style-- Strengthening the role of Cabinet for policy formation-- Weakening the influence of the MOF-- Weakening the voice of the Liberal Democratic Party

Change in policy formation style-- Strengthening the role of Cabinet for policy formation-- Weakening the influence of the MOF-- Weakening the voice of the Liberal Democratic Party

Settlement of the “Bubble” economy aftermath -- Banking reform, esp. disposal of NPLs-- Budget consolidation, esp. reduction in public works

Settlement of the “Bubble” economy aftermath -- Banking reform, esp. disposal of NPLs-- Budget consolidation, esp. reduction in public works

Measures to cope with depopulation and aging -- Reform of social security, health and disability insurance

Measures to cope with depopulation and aging -- Reform of social security, health and disability insurance

PM KoizumiPM Koizumi’’s s Supply-Side Economic Reform Supply-Side Economic Reform (2001 – 2006)(2001 – 2006)

22

23

Growth is good for the poor, butGrowth is good for the poor, butSupply-side policies for revitalizing economies put the country in the lower-Supply-side policies for revitalizing economies put the country in the lower-

right quadrant with widening inequality.right quadrant with widening inequality.

Source: Dollar and Kraay (2007), Figure 1

Thatcherism (1979-1990-1997)

Reaganomics (1981-1989)

Koizuminomics (2001-2006-2009)

24

Recent Movements in JapanRecent Movements in Japan’’s Gini Indicess Gini Indices

Source : Author’s unscientific imagination !?

Phase IV.1 : Political Regime ChangePhase IV.1 : Political Regime Change

from LDP+ to DP+from LDP+ to DP+


3.11 and Beyond



25

Source: Cabinet Office of Japan (1981-2008) “The National Survey on Lifestyle Preferences”

26

Source: Cabinet Office (2010) “Opinion Polls on People’s Livelihood”

27

Source: National Police Agency (2010) “Report on Suicide 2010”

28

Source: Historical Statistics of Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

29

Source: Cabinet Office of Japan (2008) “The National Survey on Lifestyle Preferences”30

Source: Cabinet Office of Japan (2010) “The National Survey on Lifestyle Preferences: People’s Happiness”31

Source: Cabinet Office of Japan (2010) “The National Survey on Lifestyle Preferences: People’s Happiness”32

32,000+ Suicides. 32,000+ Deaths in Solitude, 15 million Single-

member Household Disconnected Society （（（（（（　　　　　　　　　　　 Friendship/Fraternity (友愛 )

+ ‘New Public Commons’ (新しい公共 )Society where people with various backgrounds support each other for education/child raising, community development, crime prevention, disaster measures, medical/care services. The role of government in the 21st century is to （ side-） support those civil societies and NPOs.

Compiling Happiness Indicators (幸福度指標 ) for guidelines.

Political Regime Change 2009

Buzzword of 2009‘Regime Change’

PM Yukio Hatoyama(2009.9.16-2010.6.8)

33

PM Naoto Kan(2010.6.8-???)

‘Minimum Unhappiness Society’ (最小不幸社会 ) My belief is that the role of politics should be to minimise the factors that make the people of Japan and the rest of the world unhappy. That is to say, politics should aim to build a society with a minimum level of unhappiness. I say this because, while seeking great happiness - such as through a romantic relationship or a favorite activity like painting - is certainly important, this is not an area in which politics should be engaged very much. On the contrary, I believe politics should seek to eradicate poverty and avoid war. I want to rebuild Japan from the ground up and make it a more dynamic country, one which also produces more youngsters who walk on to the world stage and distinguish themselves. One way of doing so is to revive Japan's economy, rebuild Japan's public finances and turn Japan's social security system around. That is to say, we need to shore up the economy, public finances and social security together in a cohesive manner.

Compiling Happiness Indicators (幸福度指標 ) for locating factors of unhappiness.

34

What do we Japanese need? We need,

1)New Goals based on (Individual) Happiness and Social Capital/Network Connected Society with New Public Commons Safe and Secured Life （安心、安全） with Consideration for Others　（思いやり） 2) Economic Growth　 Employment for meaningful life To cope with the large stock of public debt To reduce the burden on the younger/future generation in supporting the aged/retired

35

Phase IV.2 : 3.11 & FukushimaPhase IV.2 : 3.11 & Fukushima

In Search of New GoalsIn Search of New Goals


3.11 and Beyond



36

3.11 Earthquake & Tsunami37

Inconvenient but Orderly Life at Shelters

Displaced People Orderly Evacuation

Keeping the line for …

FoodConvenience Store

Public Transportation

(Kyodo pics.)

38

Nuclear Energy to Renewable EnergyNuclear Energy to Renewable Energy

Extravagance to Modesty

Disconnected Society to Connected SocietyDisconnected Society to Connected Society

39

Traditional Values in Japanese Society

武士道Bushi-do

和Wa

義gi

仁Jin

質実剛健Shitsu Jitsu Go Ken

思いやり

(Simplicity and Fortitude)

(Humanity) (Justice)

-(Duty)-

(Consideration for Others)

(Peace, Harmony, Unity)

40

Disparities (格差 ) in Japanese Society

Gender InequalityIntergenerational Gap

Human Development Report 1993,while introducing the gender –disparity-adjusted HDI, presented a Box on ‘Women in Japan.’ Japan’s HDI Rank in 1993: 1st

Gender-disparity-adjusted HDI: 17th

Tertiary enrolment ratio: ⅔ Average earnings: 51% (ratio to that of men)

Women occupy only 2% of parliamentary seats etc. etc.

Is Japan an ‘unequal society’ for women?

Economic and Social Research Institute (ESRI) of the Cabinet Office released a study on generational imbalances in Japan’s social security system in 2009.

According to the report, while older generations enjoy net benefits, younger/future generations will suffer large net burdens.

While retirement age has been raised over the years, unemployment rates among younger age groups have been rising.

Is Japan an ‘unequal society’ for younger/future generations?

41


As the retirement age has been raised from 55 to 64 over the years, elder workers have taken away jobs from the younger generations.

42

Note: Based on net payments/receipts through the government of social security (pension, medical/care insurance, etc.). Based on a set of growth, interest rate, and demography assumptions.Source: “Sedai-betsu no Jueki to Futan (Benefits and Burdens by Age Groups) ,” ESRI Discussion Paper Series 217 (June, 2009).

Net burdens of future generation: ¥108 million; 51.4% of their life-time income

43

Source: Basic Survey of Wage Structure, Ministry of Health, Labor and Welfare

1985: Equal Employment Opportunity Act for Men and Women 1999: Basic Act for Gender-Equal Society

The large wage gap still exists between men and women, though it has been gradually narrowing.Discrimination by sex in labor practices was denounced/illegalized by the 1985 Act.

44

Source: Results of Survey of Income in Private Sector, National Tax Agency

The average female annual income as the ratio to that of male workers has been 50%± despite the various initiatives taken by the government.

45

Source: Basic Survey of Employment Status, Bureau of Statistics, Ministry of Internal Affairs and Communications

Note: Male, Female—mainly engaged in work Male/Female side work—engaged in work on the side

The rate of female labor participation as their main engagement has been only 30%+. Male labor participation rate has been gradually declining with the increasing university enrollment ratio from around 15% in 1955 to 50%+ in 2005 (10% in 1955 to 50%+ in 2005 for all students). 46

Source: Basic Survey of Employment Status, Bureau of Statistics, Ministry of Internal Affairs and Communications

Many Japanese women will not/cannot return to their regular jobs after their marriage/childbearing. However, in order to support family finances, many joins the pool of part-time workers later (with much lower hourly wages).

47

Findings from Happiness Survey in 2010Findings from Happiness Survey in 2010

(where 10 = "Very happy" and 0 = "Very unhappy”)

Average Score

Total: 6.46 (n=3,569)

Male: 6.20 (n=1,739)

Female: 6.70 (n=1,830)% of 7 or higher

(by gender)

Male: 48%

Female: 58%

Source: Cabinet Office of Japan (2010) “The National Survey on Lifestyle Preferences: People’s Happiness”

% of 7or higher(by age groups)

15-29 yrs: 57%

30-39 yrs: 58%

40-49 yrs: 53%

50-59 yrs: 53%

60-69 yrs: 49%

70- yrs: 51%

Women are econo-socially disadvantaged but happier!?

The younger, the happier!?48

… ‘… ‘Happiness’, Japanese StyleHappiness’, Japanese Style

Thank You !

49

‘happiness’ in the post-wwii japanese economic development ― in search of the new goals of...

Documents

s early

s catching

s failure

high economic growth

highgrowth period

social indicators si

social class

social objectives