Toyota’s current recall woes have generated a range of articles about the Japanese economy as journalists rush to get some Japan flavoured content served up to their masters. But often these articles simply rehash the same tired cliches about Japan and it’s economy and don’t provide people outside Japan with a balanced view of what is really happening.
Let me start off with a classic example of an article about the Japanese economy that fails to provide much balance or insight into deflation in Japan. The article in question is called “Beef Bowl Economics” and was written by the New York Times “Japan business and economics” reporter Hiroko Tabuchi.
The opening paragraph of the aforementioned article is typical of the copy written by many Japanese and non-Japanese journalists for their audience in the English speaking world.
“TOKYO — The broiled meat is tender and the rice is silky-smooth. But as Japan’s economic recovery falters, beef bowls have come to symbolize one of its most pressing woes: deflation.”
Wow..great opening there, the author has managed to get the word “deflation” in right away but the silky smooth rice bit lost me? Rice can be soft, rice can be white, but silky smooth? Put some silk in your mouth and then try some beef bowl rice and you be the judge.
Anyway the general thrust of the story is that according to “many people” the price of a quick meal of beef and rice at some chain stores in Tokyo is a reflection of the deflation forces at play in Japan.
But like many economic and business reporters, the author seems to have a fairly poor understanding of what causes deflation and so the rest of the article fails to provide much balance or look into the reasons why “Beef Bowl Economics” doesn’t make a lot of sense.
Firstly as I have mentioned before in other posts, competition generally drives prices down and it is hard for any food outlet in Japan to rise prices simply because the fast food sector is an extremely competitive area.
But on the flip side costs in many cases have also gone down due the growing use of imported food, better business efficiency and through the use of technology; so good money can still be made selling beef bowls, burgers and fried chicken in Japan.
The article does touch upon the impact increased competition is having on beef bowl prices, but it is hardly given the attention it deserves in order to make the article balanced.
Maybe if the author had some more time to write the story then the article would have been better, and to be fair, I suspect that the reporter in this case was under pressure to push out articles. If this the case then the New York Times is at fault.
In the rush to get stories about the Japanese economy online, pieces like “Beef Bowl Economics” and many other articles about the Japanese economy seem to follow a fairly standard pattern:
First they start with a catchy introduction that should mention either deflation, the bubble economy, the gradual decline in the population or excessive infrastructure spending.
Next the article should relate it’s main theme to a real life example without mentioning any other examples that would contradict what the writer is basing their analysis on. Popular real life examples include wasteful building projects, unemployed people sleeping in parks, closed down shops or factories, rural towns that are almost empty and the best of all: some quotes from the “man or woman on the street.
To make sure the article is not balanced the writer will fail to mention such things as how a lot of government spending is directed towards earthquake or flood protection measures, how some areas of Japan are economically vibrant or that Japan has one of the lowest rates of unemployment in the G-20.
Somewhere in the article it is important to drop in a historical reference to the bubble economy (even if it is irrelevant) and just for good measure throw in something about the declining population and Japanese culture. The aim here is to try and make out what is happening in unique to Japan as though the economy operates according to a different set of principals from the rest of the world.
Hiroko Tabuchi for example makes the following comment her article:
“Moreover, the population is shrinking, making demand inherently weak. Economists say Japan’s economy is saddled with a 35 trillion yen, or $388 billion, “demand gap,” or almost 7 percent of the country’s economic output.”
Actually much of the supply/demand gap has been caused by exports demand falling as a result of the global financial crisis over the last few years and to suggest this is largely driven by a shrinking population is pure folly. In fact you can have a declining population and increased domestic demand if people earn more and exports surge. These factors will also reduce the “demand gap”
In addition there is no mention of areas where prices have risen like taxi fares, beer (for shame!) and milk or how price rises are hidden by making servings smaller.
If people are vanishing from the streets as the population falls then who is drinking all the beer?
Finally we get to the last area that needs to be included in the standard article about the Japanese economy and that is to finish off with something that is both catchy and gives the article the “in the streets” feel. Tabuchi-san finishes her article off with a very good example of this with:
“I don’t think there’s anything around here cheaper than this. That’s why I started to come,” said Yasunori Miura, a manufacturing company employee and a recent regular. “This here,” he said, pointing to his fish sausage, “is deflation.”
Perhaps this closing paragraph from the article is simply the human touch element and maybe according to the reporter’s textbook, it needs to be included. But if you are going to write a human interest story about life in the beef bowl industry then don’t try and pass it off as business and economics content, or try and convey that it somehow gives readers a good view of the overall economy – because it doesn’t.
What the price of a beef bowl is in Japan tells us little more than what the market price is for that meal, just as the price of a Big Mac is not a very good way to judge the overall health of the U.S economy.
Yes the Japanese economy is dealing with deflation at the moment but as I have written before in Is deflation rally such a bad thing? why do people quickly panic and assume deflation is a bad thing?
I would suggest that as an exporting nation, deflation is probably a better problem to have while exports are weak than inflation. As the global economy recovers, deflation in Japan will become less of a problem.
Will beef bowl prices be affected when that happens? Maybe, but I would imagine beef and rice prices are more likely to determine how much I pay for a quick lunch at Yoshinoya. Also in regards to beef, this has very little to do with the Japanese domestic economy as the beef is mainly imported.
I don’t have a catchy real life example to finish off my article today because I have not been educated in fish sausage economics. All I know is beer prices have gone up in the last few years in Japan and I am not happy about it. But I won’t be writing anything linking beer prices to inflation any time soon.