What factors really drive Japanese to save 20 percent of their income?

By Nancy Collisson

In his introduction to The Japanese Mind, Robert A. Christopher reflects upon the wasteland he remembers that surrounded him during a drive through the rubble of postwar Tokyo in 1945. Of all that he might have shared about his experience, I found, in his choice, something strikingly poignant: ‘The only thing vaguely reminiscent of human habitation … [was] an occasional burnt out safe.’ At that time, Christopher found the spectacle of those particular charred remains to be merely a ‘forlorn reminder of the illusory prudence of some businessman or householder now as likely or not, dead.’

Christopher’s guiless comments reflect a widely held underestimation of the very serious business the accumulation of private savings meant to individual Japanese prior to the war, as they have until today. The fact that only safes remained intact demonstrates neither that the fiscal prudence of the Japanese before the war was illusory nor that it was as futile an exercise as Christopher implies. The fact is those safes held much of what would have been channeled to Japan’s central banks in order to provide that nation’s military leaders with a primary source of funding necessary for operating their military machine.

Japanese wartime accumulations of personal savings were barely enough to sustain Japan’s massive war effort – much less support a successful campaign against the United States in the Pacific. As a matter of fact, the Japanese relied too heavily on savings to help subsidize their effort. One indicator of saving habits is consumption behavior. By 1944, consumer expenditures in Japan had dropped to 38 percent of GDP, compared to 67 percent of GDP in 1940. Over the same period, consumer expenses rose substationally.

According to Jerome Cohen, Japan failed to broaden the base of its economy during the war, ‘making it unable to match the feverish economic mobilization of [its] opponent.’

Other avenues for funding the state, such as the sale of bonds, not only were non-traditional methods of capital accumulation, but they were also viewed by the Japanese as inefficient. According to Cohen ‘… the financial resources of Japan were so compactly held that it was far more simple and productive to create an internatl financing circuit which for a long while yielded the same results with much less trouble. The tax structure was used mainly to curtail civilian consumption and in place of bond drives, the government’s propaganda was directed toward stimulation of savings which was wholly in keeping with Japanese tradition.’

After the war, Japan broadened her economic base and bacame quite the match for her economic competitors. To do so, however, she never dramatically altered the priority she had always placed on encouraging individuals to maintain or increase their rates of personal savings.

Because the goal to accumulate high rates of personal savings had been a fact of life among many Japanese prior to and during the war, it certainly cannot be said that we provided the incentive to the Japanese to save, or – as Peter Drucker describes this penchant – that the act of saving money there was ‘a good habit [our postwar economic missions] engendered in the Japanese after the war.

In considering the existence of the growth of high personal savings in Japan during the postwar period, one cannot overlook the obvious conditions that have promoted high personal savings such as widespread company-sponsored lump-sum bonus payments to employees, consumption of relatively inexpensive foodstuffs,and the influence of pressure on the working populace to save in order to care for an expanding elderly population. This handful of factors alone created for postwar Japanese important, actual incentives to save. Again, Mizoguchi, Komiya, Hijikata, Blumenthal, and Shinohara have carefully addressed the contributions of these features to savings rates in Japan.

Nevertheless, despite their dramatic impact on high savings in Japan, these types of conditions cannot alone account for the high rates of personal savings. These conditions, or the economic opportunites they presented, could not even have existed had the Japanese held nothing more than a shallow commitment to values that create the foundation for spirit of saving: diligence, restrained impulsivity, a willingness to sacrifice, and a sense of familial and social responsibility. That they in fact have valued the practice of saving more than the people of any other nation on earth must, it seems, have its origin in values deeply embedded in the collective national psyche.

When a tradition is coupled with government-centered support, however, the tradition can only thrive. In this chapter, I will trace those stages of philosophical development that influenced this nation’s resolve to save as the best means of attaining economic stability and security. I will uncover the origins of high savings from Confucius to the wartime influence of Kokka Shinto,which came into existence at the beginning of the Meiji period (1868-1912).

The fact is, the Japanese postwar practice of accumulating high personal savings has its origins grounded in a tradition of ancient ideology that ennobled individuals who worked hard, who did without the superfluous – including eschewing rich foods in order to enhance their spiritual growth – and who set aside personal goals whenever those goals failed to benefit those of the greater group.


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