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Sep 4, 2012

[Ankoku Yakou] This Country Divided Into The Rich And The Poor : New-Rich and New-Poor Like This

The rich mistake the poor to be “lazy people.”  I do advise them to once try to choose the poor as politicians or prime minister by lottery.  I am assured that people chosen in such a way will do much better than Kan,former prime minister and Noda, current prime minister.

Masatoshi Takeshita

English translation of an excerpt of a Japanese article: Anya Yakou ~ I Give A Thought To Collapsing Japan ~ August 22, 2012

[Article to Note]  This Country Divided Into The Rich and The Poor: New-Rich and New-Poor Like This

Japan once had an age called “age of all Japanese belonging to the middle-class.”  Many households were called “middle-class” and all people lived an average and uniform life in a good sense.

A “uniform” outlook on world exemplified by this “age of all Japanese belonging to the middle class” fits to the mentality of Japanese who dislike explicitly excessive competition but it is the “lack in common sense” by global standards, hardly seen in the world.

The “gap between rich and poor” seen in this article is very common in almost every country.

I lived in Southern American countries in childhood because of my father’s work.  It is a sharp contrast between the town where the rich lived and the slum where the poor lived that is imprinted on my memory as a child.

On weekends the children of the poor begged for money surrounding the cars the rich family sat in.

Japan of “age of all Japanese belonging to the middle class” in a good sense is “totally opposite” to the society I lived in when I was a child.  Especially since “globalism” or “global standard” was adopted under the LDP/Koizumi administration, “global standardization” in a bad sense has been apparently promoted at once and the situation called “polarization” has been accelerated.

Namely, Japan has not been divided into the rich and the poor, but rather the “world specific to Japan” rarely seen in other countries has collapsed and the bad practice of the western countries has run rampant over Japan.  The result is the today’s “polarized” world.

In a word, Japanese characteristics have been lost and the gap between the rich and the poor commonly occurring in other countries has started to appear.  It is difficult to put back the clock again and “polarization” and “rich-poor gap” will be widened to the same level as in Western counties.

We Japanese will be challenged by a future never bright but poor.

(Comment by the blogger)

(Excerpt of a Japanese article: Shukan Gendai “Blind Spot of Economics” – August 21, 2012 –

*This country divided into the rich and the poor 
Part II: New-Rich and New-Poor Like This One out of six Japanese Poor and One out of 71 Rich
Confrontation between new-rich and new-poor Has Started!

Transition of population of the rich and poverty ratio
Polarization in progress; an increase of the rich as well as the poor
Looking at the right (*upper) graph, you will apparently see that new “millionaires” have come into existence every year since 2002, except for 2008, the year of outbreak of Lehman’s fall.

“The rich with financial assets of more than JPY 500 million are called “billionaires.”  There were 26,326 in 2009 and 34,879 in 2011.  Most of them run medical corporations or law firms.  Furthermore, many people are increasing their assets by inheriting them from their ancestors.

Approximately 90 percent of such people are considered to hold real estate in some form or other.  Approximately 10 percent among them are owners of condominium buildings.  As they have the whole buildings, with high profitability, wealth produces wealth.”  (Mr. Shotaro Kobayashi, Fuani Soken)


left: Option in life after graduating from high school by parents’ income

The higher the income of parents is, the higher the percentage of graduates continuing on to four-year universities or colleges is.

Source: University Management & Policy Research Center, Tokyo University Faculty of Education: “Association between option after graduating from high school and income of parents” July 2009

right: Japanese wages and number of families receiving public assistance

With a fall in wages, the number of families receiving public assistance continues to increase.

Nominal wage index is computed with 2010 as 100.
Source: Ministry of Health, Labor and Welfare  

On the other hand, new-rich and new-poor continue to mount, as mentioned the previous section.  The relative poverty ratio (the percentage of households with income of less than one-half of the median of income distribution) stipulated by OECD (Organization of Economic Cooperation and Development) was 14.9 percent in 2003 and 16 percent in 2009.  This means that one out of about six Japanese lives with income of less than one-half of the average income.

The number of people receiving public assistance goes on increasing with approximately 2.11 million people (approximately 1.53 million families) as of March 2012.  The budget to allocate to them reaches the enormous amount of money: approximately JPY 3.7 trillion.

It is highly likely that the number of people receiving public assistance, a great burden to public finance, will greatly increase.  This is because the new-poor have come into existence.  What are they like?  Mr. Ryouhei Kawamura, the secretary-general of NPO “POSSE” tackling the working poor issue, talks about it.

“The people in question are middle-aged and older part-time workers, mainly those in their 40s.  They are non-regular employees and yet not young.  Most of them are said to be unable to receive pension benefits in the future.  Comparing them with the young working in the same work place, they are in miserable situation.  When the young consider such people to be what they will be in the future, the young cannot try hard though their parents or full-timer friends encourage them to “do their best at work.”

There were the poor in the past, too.  However, the quality of poverty has greatly changed.  During the period of high economic growth, people could expect to live a better life in the future though they were poor and so they did not complain about low wages.

However, now once they become the poor, they will be unable to get job or satisfactory food.  They cannot expect better future.  The new-poor people have profound despair that hard work will not pay off.

*Exclusive Towns where the rich alone live

In addition, poverty causes vicious cycle.  College Management & Policy Research Center, Tokyo University Graduate School of Education has released shocking data.  The ratio of advancing to four-year colleges or universities was 28.2 percent for children born to parents with annual income of less than JPY 2 million.  Thirty-five point nine percent of such children opted to find employment after graduating from high-schools.

On the other hand, the ratio was 62.8 percent for children born to parents with annual income of JPY 12 million.  Only5.4 percent opted to find employment.

Namely, annual income of parents directly affects the academic background of children.  Not individual efforts but parentage determines social stratum.  A feeling of helplessness and a sense of stagnation have rampant over the whole society.

The areas where people with high annual income live are filled with plans to build ultra-rich condominiums.  European and American juggernauts have invested funds to such plans.  Mr. Arito Oki, representative of Attractors Labo., says:

“It is easier to maintain asset value of a condominium situated in a prime location in central Tokyo.  The rich who can afford to purchase expensive property are likely to make a profit by resale.

When purchasing real estate, the rich never compromise whatever it is for investment or for homes of their own.  They will not purchase real estate situated outside the Yamanote line with JPY 100 million, but rather will purchase real estate situated inside the line even with JPY 200 million.  They know that the latter is less risky.

On the other hand, low-income earners tend to choose property with a high risk of drop in price because of affordability and near-sighted accessibility.  Such different stance may widen the gap between the rich and the poor.”

To make the matters worse, the DPJ, LDP and New Komeito have promoted for the “comprehensive reform of social security and tax systems,” which will further affect low-income earners.


 Impact of “comprehensive reform of social security and tax systems” on household budget

”Comprehensive reform” will make the household with annual income of JPY 3 million
more badly-off than that with JPY 20 million!

*A major think-tank has made a trial estimate, considering the revisions described in annual outline of tax reform for fiscal 2012 and revisions in the bill for “comprehensive reform of social security and tax systems” including the tax increase for reconstruction and the consumption tax rate hike, both of which have enshrined in law.

How will the tax increase for reconstruction and the increase in social security expenses have an impact on the disposable income of the single-income family of four including two children?

According to a major think-tank, it estimates that the household with annual income of JPY 3 million experiences as much as a 8.87 percent decrease in disposable income while the high-income household with annual income of JPY 20 million, 7.41 percent decrease.  Higher-income earners suffer lesser impact.

It is more difficult for the poor to live in the society.  On the other hand, the rich complain about the social system in which the government uses the tax they pay for “the lazy.”  It seems almost impossible to bridge the rift between the two.

(Reprint of August 18th and 25th issue of “Shukan Gendai”)

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