Why do you think the Japanese economy has been in the doldrums
for so long? Read this:
"Construction workers, with their traditional baggy trousers and
cloth split-toed shoes, look increasingly anomalous in contemporary
Japan. But there are still a lot of them more than you'd think.
The construction industry employs 10% of Japan's workforce,
twice the proportion in the U.S. And even though the
construction market has shrunk since the peak of the speculative
"Bubble Economy" of the late 1980s, the number of construction
workers has gone up, to around 6.5 million recently compared with
5.9 million in 1990.
Why? Since the bubble burst, Tokyo's primary weapon to spur the
economy has been round after round of public works spending. "After
the bubble, Japan should have been scaling down this sector, but
because of the stimulus packages, this sector kept growing," says
political analyst Okazaki Shigenori of UBS Warburg Securities in
Tokyo. "These people had to be kept employed, so they kept pouring
money into public works."
They have to be kept employed for two reasons. One, there
are a lot of them, and Japan has a skimpy social safety net for the
jobless. Two, the construction industry lies at the center of the
LDP's political power base. "We have to depend on the
power of politicians to win contracts for public works projects,"
an executive of the Japan Federation of Construc-tion Contractors
recently told the Japan Times. "So we have supported [LDP members']
election campaigns."
......This symbiotic relationship carries two major demerits. Since
these industries never faced unbridled market forces, they
are inefficient and falling further behind. In the 18 years to
1998, Japanese manufacturers raised their productivity 69%, while
cutting costs 3.4%, says economist Murakami Naoki of BNP Paribas in
Tokyo. But the construction industry raised its productivity just
7%, with costs rising 61%. "Productivity did not improve
much in highly regulated industries such as construction, property
and services," Murakami says. And that increases costs for the
whole economy."
Japan is desperately trying to change these errant policies but it
has been very difficult so far. As the President said in his
speech, we must avoid the mistake of welfarism as practised in some
countries.
(http://www.asiaweek.com/asiaweek/magazine/nations/0,8782,101784,00.html)
