The Journal The Authority on Global Business in Japan

In recent years, Japan has bounded forward, proving itself as an economic powerhouse and global leader. The case for Japan as a best-in-class model for free-market capitalism is getting stronger. With rising productivity, growing global competitiveness, and cutting-edge innovation, the country is providing social stability and equal wealth.

On May 17 at Tokyo American Club, Jesper Koll, senior adviser at WisdomTree Investments Inc., delivered a presenta­tion entitled The Power of Nipponomics: Capitalism That Works. At the luncheon, hosted by the American Chamber of Commerce in Japan Foreign Direct Investment Committee, Koll spoke about general wealth, low rates of debt, the uti­lization of youth, and how the government and large companies can implement policies to ensure Japan’s growth.

Speaking about the economic bubble that burst in the early-to-mid 1990s, Koll praised the strategy Japan used to deal with it. “Japan is the only country that did not waste its financial crisis. When Japan had the big financial crisis in 1995 and 1996, the elite radically restructured it. The government ministries were cut from 22 to 13. There were a lot of growing pains with the establishment of the new Financial Services Agency, but now you actually have a streamlined government.”

This seems to have benefitted the Japanese public’s general wealth. “Despite the collapse in real estate, despite the collapse in equities, you actually see that the average Japanese person is very well off. They have net financial assets of about $100,000. When you look at the distribution, yes there are poor people in Japan—about nine percent have less than $10,000 to their name—but it’s still a pretty good outcome given the adjustment Japan has gone through.”

This, as he displayed in the slide show, is largely different from the United States, where 28.1 percent of adults have less than $10,000 to their name and 6.4 percent of adults have more than $1 million. In Japan, adults with wealth over $1 million make up just two percent of the population. This shows that the average wealth of Japanese is more equally distributed, which improves social stability.

Koll also shared that 48 percent of all Japanese people over the age of 25 have no debt—no credit card, consumer installment, or mortgage debt.

“The interesting thing is engagement of human capital is actually growing very, very nicely. You see this in the fact that, yes, we do have the end of wage deflation. Finally, after having declined for about 20 years, you’re finally seeing that wage growth is actually accelerating.”

He expanded on this by highlighting the details behind this growth, crediting company policy changes. “It may not neces­sarily be just wage increases, but it’s the quality of contracts that is actually starting to improve.”

It is no secret that the population of Japan is shrinking. Society is aging and fewer people are having babies. However, Koll sees some positive effects this is having on Japan’s economy.

“Over the past two years, every day, the population shrinks by about 1,200 people. At the same time, the number of people who are employees working for companies—rather than being self-employed—goes up by 3,000 every day.” He credits this rise to the utilization of young people. “This is an investment in the future. As you see, the income distribution in Japan is also very good. I want to be reborn as a 23-year-old Japanese,” Koll said enthusiastically.

Koll also spoke about how the diversity and inclusion (D&I) movement has had huge positive impacts when it comes to Japan’s economy and social welfare. “Womenomics, female empowerment, and getting more women into the workforce has actually been very positive in closing the gap between the rich and the poor people.”

Attitudes changing within companies are also encouraging marriage and children—a plus in a country with a rapidly aging society. “Finally, companies are trading full-time jobs with better pay, with job civility, with access to credit. As a result of that, you actually find marriage rates going up and you do start seeingthat the fertility rate—slowly but surely—is actually starting to increase.”

Megan Casson is a staff writer at Custom Media for The ACCJ Journal.
Womenomics, female empowerment, and getting more women into the workforce has actually been very positive in closing the gap between the rich and the poor people.