Finance and economics: Inequality in Japan The secure v the poor
The problem is not the super-rich.
IN THOMAS PIKETTY'S bestseller, “Capital in the Twenty-First Century”, Japan appears as another rich country in which wealth is becoming ever more concentrated.It is certainly another rich country in which the book is selling well.Mr Piketty visited Tokyo this month, to a rapturous reception.Yet Japan may be the place where his thesis holds up least well.The bursting of Japan's asset bubble in 1991 is one reason why the rich have amassed less than in America or many European countries.
The share of wealth held by the richest tenth of Japanese is lower than in famously egalitarian spots such as Norway and Sweden.In fact, it is the second-lowest of the 46 economies surveyed by Credit Suisse Research Institute, above only Belgium.The share of income going to the wealthiest has been fairly stable too.Levels of executive pay are far less egregious than in America.According to an analysis prepared for the Wall Street Journal by Mr Piketty's collaborators, the share of national income taken by the top 1% in Japan, excluding capital gains, fell from a high of 9.5% in 2008 to 9% in 2012.
Other types of inequality, however, are on the rise.The most important is not between the mega-rich and the rest, as “Capital” would have it, but between a privileged cadre of workers on permanent contracts and those with more precarious jobs, who account for a rising share of the workforce.The average annual salary for permanent employees is around ￥5m ($41,500) , compared with ￥2m for less secure workers.Many argue that what Japan really needs is a lot more inequality, but of a different kind.Its employment system still tends to reward seniority and status rather than performance, in what Japanese call aku byodo or “bad egalitarianism”.
If people were paid for what they accomplish, argues Robert Feldman of Morgan Stanley, the economy would grow faster.And Japan's chronically low levels of business creation mean that there is worryingly little wealth inequality of the sort created by entrepreneurs who become billionaires by dreaming up exciting new products and services.None of that has stopped “Capital” selling over 130,000 copies so far in Japan.
Idiots' guides to the 700-page tome have also done well.Mr Piketty's timing is ideal, for he has tapped into growing doubts about Abenomics, the economic-revival plan of Shinzo Abe, the prime minister.By inflating asset prices, Mr Abe's schemes could increase the gap between haves and have nots, Mr Piketty warned during his visit.Ironically, however, Mr Abe's main economic concern at the moment is bullying big companies into lifting workers' pay.