Life in Japan

Wednesday’s article, Japan’s Recession, elicited many emails. One of the best came from Kelly Letter subscriber Tom Glass in Redding, California. I’ve separated his note into sections, and address each individually below.

How do families pay mortgages and rent as they lose their high-paying jobs? Taking a second job selling noodles would not cover the difference of the income lost, at least not in the U.S.

One thing to keep in mind is that Japan has been in a recession for nearly two decades. People long ago downsized, and are pretty good at surviving. Most families have little or no debt, buy everything with cash, and save as much as possible every month. That leaves them far healthier financially than their American counterparts.

Also, mortgages are not as expensive here. Mortgage interest rates have been 3% and less for years, and the payment schedule is built around the biannual bonus system. Ten months of the year see people paying modest mortgage payments, and two months see payments twice the usual size. That gives people five months to scrape together what they know they’re going to need for the bigger payment months.

Don’t forget that Americans pay much more in taxes than Japanese people pay, and Americans get little in return for those taxes, except another war somewhere. While Japanese families enjoy national health care and national automobile insurance, Americans must bear the burden of their own health care costs and navigate the network of car insurance sharks.

It’s a myth that Japan is more expensive than America, as I explained a year ago in Benefits of Living in Japan. Combine the lower cost of living with the cash-based, no-debt culture, and you find that Japan has an economically resilient population.

Working in ramen shops is nobody’s career choice (except the owner’s), but it’s a good way to make a few yen to help bridge the gap between full-time income and the cutbacks in place now. They pay about 1,000 yen per hour, so working 10 hours per week produces an extra 40,000 yen per month. That’s $430, and buys a month’s worth of food for a careful family.

What has happened to the real estate market in Japan?

Real estate works differently in the U.S. and Japan.

In America, you find your home, borrow money to buy it, pay the bank every month for 30 years, and hope to end up with something worth more than the sum of all you put into it. That is, real estate appreciates in America.

Except in the cities during the bubble of the 1980s, real estate does not appreciate in Japan. Here, a family ends up with property that’s worth less over time. That is, Japanese real estate depreciates.

Surprised? Most people are, because they think it’s a natural law that the value of a property goes up over time. It’s not. It’s a man-made law, and a strange one. The theory is that because there’s a finite amount of land, just as there’s a finite amount of gold, it should get more precious as demand rises. With the population growing all the time, land should get more valuable.

Fine, but what about the building? By Japan’s way of thinking, a house built 20 years ago is not worth as much as one built last month. Rather quickly, homes look aged here, and nobody wants to pay much for them. When somebody buys land with a house on it, they almost always raze the place and build a new one.

That takes the appreciation of the building away. As for the land, people don’t own sprawling tracts like they do in America, so there will never be a shortage. Frankly, properties in Japan are too small for my taste, but I’ve come to see how much I can do without and if an American with big appetites could change his mind, imagine how flexible Japanese people are about property size. I think the entire country could live comfortably within the confines of Tokyo, harmoniously. Heck, one out of five Japanese already does live in the Tokyo metro area.

Because of that cultural view of nobody being entitled to much land, and the shrinking size of Japan’s population, land doesn’t appreciate, either.

So, to the question, not much has happened to Japan’s real estate market because it sat on no overinflated perch from which to plummet.

Can families afford amenities and luxury items? Does every family have a car? A cell phone or Blackberry/iPhone type gadget?

I think Wednesday’s article gave the wrong impression.

Japan’s lifestyle is thoroughly modern, in many ways more so than America’s. Yes, every family has a car or two, everybody has a cell phone, iPhones are getting popular, and every child has at least one handheld game devices and a home game system as well.

New movie theaters are fantastic with stadium style seating so there’s never a head in front of you, malls are huge and almost the same as the ones you find in America — there’s even a Chelsea Premium Outlet here in Sano, and daily living is well-designed inside homes. Among my favorite features in my own home:

  • A tub that knows how much water I want for my bath and what temperature I like. I push a button on the wall in my kitchen, a lovely woman’s voice tells me she’s filling the bath, she (it, really) fills it to the right level with water at my preferred temperature, calls out to me that the bath is ready, and then keeps the water at my preferred temperature until I go take a bath and tell her I’m finished. Rough life.

  • A bidet with heated water.

  • A heated toilet seat with adjustable temperature. It can be turned off in hot months.

  • Room lights that glow after I turn them off, allowing me to get into bed with a little light, and then go sleep as they fade out.

  • Illuminated light switches so I can find them in the dark.

  • Walls covered in a textured paper that cleans with a quick wipe of a wet cloth.

  • Translucent sliding doors that enable me to section off rooms for heating and cooling, thereby not wasting money by maintaining the temperature in places nobody’s using.

As you can see, life is good in Japan, even during a recession.

I was under the impression that education is very important in Japan. How do students afford college?

Education is important, but not the way you think so. In America and most of the West, education emphasizes creative thinking, expressing one’s opinion, and boldness. In Japan, it emphasizes becoming Japanese, and it does so through repetitive disciplinary routines and rote memorization.

The reason most Japanese people can’t speak English well is that it’s taught the same way kanji is taught: memorization. Everybody knows that language is organic, and only as good or interesting as the person using it — except Japan. The Japanese education system thinks it’s more important to memorize that the one and only correct response to the question, “How are you?” is “I’m fine, thank you, and you?” Students are actually tested on that. Write in “Pretty good” or “OK” or “Tired” and you got it wrong.

Thus, Japanese primary school is all about memorizing dates in history, solving math problems, robotic responses to language, and so on. There is little creative thinking. The quickest way to silence a room of Japanese students is to ask for their opinion. Nobody will have one, unless the teacher gave it to them.

Japan makes no qualms about weeding people out early and publicly. If a person is destine
d for a trade, he or she knows so early and begins moving in the direction of trade school. In fact, where a person goes to high school is as much an indication of their future as where they go to college. High school and college entrance exams are rigorous.

As for affording college, it’s not hard. Japan’s equivalent of Harvard is the University of Tokyo, called in Japanese Tokyo daigaku or just Todai. It’s the best school in Japan, and one of the best in Asia. Can you guess what the annual tuition runs? Between $7,000 and $10,000. To pay for that, students tap the usual sources: parents, scholarships, savings, loans, and part-time jobs. Figuring out how to come up with $10,000 per year for Todai is a lot easier than figuring out how to come up with $33,000 per year for Harvard.

I feel that the Japanese education system is wrecking Japan. It’s the reason Japanese politics is entombed in old ideas gasped out by old men. Nobody craves a new way of thinking the way we do in America when one way is shown to be wrong.

Few people balked when the Japanese government decided to stimulate its economy over the past 19 years by encasing all the rivers in concrete and paving the beaches of this island nation. The beaches are gone. The rivers are cement. It’s hard to find a mountain scene without at least one mountain chopped in half. Clear cutting dominated forestry, and those in charge were so clueless as to how trees grow that the replanting was done in rows like corn or rice, so entire hillsides look like AstroTurf from a distance.

While the majority of so-called average Japanese people offer predictable conversation with the same answers to the same questions, there are exceptions. Those exceptions are wonderful people who try hard to make their country all it can be. Conversation with them is exciting and mind-expanding. They, too, note much of the above when looking at their situation, and it frustrates them.

If you have an interest in knowing more about what Japan gets right and what it gets wrong, pick up a copy of Alex Kerr’s Dogs and Demons. This place is wonderful in so many ways, but it ain’t all cherry blossoms and sake.

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