Europeans wondering what life might be like under sustained deflation need look no further than a bowl of gyudon — the Japanese comfort food of rice topped with beef and onions.
The price of gyudon has become an unofficial bellwether for the health of the world’s third-biggest economy, which has been beleaguered by more than two “lost decades” of stagnation as consumers have resolutely refused to start spending and lift their economy out of trouble.
Which is why last month’s decision by Yoshinoya, Japan’s largest chain of gyudon restaurants, to raise the price of a standard-size dish by 27 percent is not all it seems. Far from heralding a new era of inflation, the price rise, to a still very affordable ¥380 (US$3.20), simply highlights the deflationary depths into which Japan has sunk: This, after all, was the first gyudon price increase in almost a quarter of a century.
If Japan’s experience is any indication, living in a deflationary spiral can be complicated. Conventional wisdom tells us deflation is bad for jobs and growth, and that it causes the debt burden to weigh more heavily on households, companies and governments.
However, for the average Japanese person, life under two decades of falling prices has had its compensations. Having seen so many false dawns, consumers have reached their own accommodation, of sorts, with the scourge that is now threatening the eurozone.
First, it has shattered Tokyo’s undeserved reputation as a prohibitively expensive city. It wasn’t so long ago that McDonald’s there was selling a ¥100 hamburger, and clothing retailer Uniqlo has built a global empire on selling cheap, no-fuss garments.
Expensive hostess clubs, harking back to Japan’s 1980s bubble era, still exist, but they share premises with izakayas (bars) where a glass of beer costs a paltry ¥180. Visitors from London and Sydney can barely believe how little they pay, comparatively, for a decent meal and a few drinks in Tokyo.
Yet it would be wrong to overlook the damage done to the Japanese psyche in the immediate aftermath of the bursting of the bubble in the early 1990s. The rows of black taxis waiting for businessmen on generous expense accounts to pour out of the exclusive restaurants did not go away, but their story became a very different one — of corporate restructuring or, in ordinary language, cost-cutting.
The boom gave way to rising unemployment and the emergence of a new generation that flitted between poorly paid contract jobs, resentful that the postwar dividend of savings and generous pensions appeared to have ended with their parents’ generation.
Now, as Japanese Prime Minister Shinzo Abe enters the third year of his deflation-busting mission, anger and insecurity in the country have given way to resignation.
His campaign to devalue the yen has proved double-edged. A weaker currency may have improved the bottom line for exporters, but the dividends have not been passed on in wage increases. For the time being, Japan’s companies, like the people they employ, prefer to sit on their cash rather than spend it.
This has given rise to growing doubts about the Bank of Japan’s inflation target of 2 percent. Abe, meanwhile, is hedging his bets on delaying a second planned rise in the consumption tax to 10 percent, in an attempt to encourage spending and lift the country out of yet another recession.
However, Japan is facing problems that the eurozone does not necessarily share — yet. Its population is aging more rapidly than almost anywhere else in the world, and that leaves a shrinking, cautious consumer base that is learning to live with deflation while the central bank embarks on periodic binges of quantitative easing.
Spending habits honed over 20 years die hard, and if Japan’s experience can teach Europe anything, it is that government attempts to haul consumers out of the deflationary abyss are fraught with difficulty.
An entire generation has come to embrace the deflationary devil they know. For the population at large, what started life as a reluctant thrift habit borne of necessity has quietly become the economic version of the Stockholm syndrome.
And even at its new, elevated price, a steaming bowl of tasty gyudon is still an absolute steal.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last