In recent months, Japan’s stock market has soared to new heights, signaling a robust economic picture to the outside world.
This growth, often seen as a barometer of prosperity, paints an image of Japan as a thriving nation, particularly to foreign visitors who, bolstered by strong currencies, experience the country as an idyllic paradise.
However, this international facade of wealth and success stands in sharp contrast to the reality experienced by the average Japanese citizen, unveiling a complex paradox of visible affluence versus widespread local hardship.
I want to highlight here the latter point, how the Japanese consumer is squeezed not only by a weakening yen but also by the constraints of a non-free market.
I will take two cases where this is particularly evident, the taxi and phone industries.
The taxi industry in Japan offers a clear example of this paradox. Uber has failed to make a significant impact in Japan unlike in many countries where ride-sharing apps have revolutionized urban transportation by offering cheaper, more convenient alternatives to traditional taxis.
The service has been adapted to fit into the existing taxi infrastructure, serving merely as an app for hailing licensed taxis. This adaptation means that the potential for competition-driven price reductions for consumers is virtually nonexistent.
As a result, the entry of Uber into the Japanese market has not led to the lower fares typically seen elsewhere, leaving consumers to contend with high transportation costs without the benefits of increased competition and innovation.
Take for comparison the Grab app, which is widely used in Southeast Asia and originates from the region.
Specifically, Grab was founded in Malaysia in 2012 and is particularly popular in these regions due to its wide range of services tailored to local needs, its user-friendly interface, and its contribution to the gig economy, providing income opportunities for millions of drivers and delivery personnel.
I have personally met tens of drivers in this region who have a steady income thanks to the industry disruption that Grab was able to generate.
The situation in the mobile phone industry further exemplifies the challenges faced by Japanese consumers. Major smart phone brands engage in practices that lock consumers into using their devices exclusively with specific providers.
This means consumers cannot simply switch to a local phone service to take advantage of cheaper rates or better coverage as they might in other countries. This lack of flexibility significantly increases the cost of mobile usage for the average consumer, further exacerbating the financial strain on a population already dealing with high inflation and stagnant salaries.
In contrast, in many other Asian countries, consumers can easily switch providers or choose local services that offer more competitive rates, thereby reducing their mobile expenses considerably.
These examples underscore a broader issue within the Japanese economy: a disconnect between the booming stock market and the economic reality of its citizens.
The stock market’s growth, while indicative of a healthy economy on the surface, masks the struggles of everyday people who face high costs of living and limited consumer choice. This situation is compounded by regulatory environments that favor established industries and corporations over innovation and consumer welfare.
The discrepancy between the international image of Japan as a land of affluence and the local experience of hardship is not just a matter of economic indicators but also reflects deeper societal and policy issues.
The government’s regulatory policies often stifle competition and innovation. This not only limits consumer choice but also impedes the economy’s ability to adapt to global trends and technologies, affecting the nation’s competitiveness and the welfare of its citizens.
On the one hand, Japan needs a regulatory reform that would encourage competition and innovation, breaking down the barriers that have historically protected incumbent industries at the expense of the consumer.
On the other hand, there must be a concerted effort to ensure that the benefits of economic growth and technological advancement are felt more broadly across society. This could involve policies aimed at increasing wage growth, improving access to affordable services, and fostering a more dynamic and competitive market environment.
Only then can Japan begin to bridge the gap between its international image of a wealthy nation and the local reality, ensuring that its economic growth translates into tangible benefits for all its citizens.
*The views expressed in this article are those of the author and do not necessarily reflect the official editorial position of UCA News.
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