neutrino23

Learning from the Japanese Experience

Wow, where to start? Japan is a very complex society and one very much different from almost anywhere else in the world. You are trying to draw inferences from a very narrow view of Japanese life and I don't think it works.

Yes, lifetime employment exists in Japan, but not as much as before. If you read the article you linked to it says that about $624 million was spent per year by the government paying workers without productive jobs. Per capita that would be about $2Bn in the US. Just as an example, compare that with the $19Bn or so we spend yearly on the so called "war on drugs". How much productivity gain are we getting from that boondoggle? Given the economic multiplier of paying wages this is probably not a bad investment for the Japanese government and pretty small money anyway.

Yes, lifetime employment is probably hurting the Japanese economy somewhat. On the other hand employers do have a lot of flexibility in paying yearly wages that we don't have in the US. The article briefly mentions that companies may cut bonuses. In the US, unless you work for a financial institution, bonuses may amount to a few per cent of income and are a nice reward for work well done and are considered optional. In Japan bonuses are standard if the company is doing at all well and are structured to be something like 2, 3 or 4 months salary. In hard times the "bonus" may be eliminated amounting to the rough equivalent of a 25% cut in head count. There is also the case of the temporary workers who, as here, can be hired and fired at will.

If you want to pick on Japan there are other more interesting things to look at. Like how they are extremely reliant on exports. Like how they are heavily restricted by red tape. This both protects large companies and makes it very hard for start ups to break into the market and how hard it is for start ups to gain financing. Like how they heavily protect their domestic market.

My point is that there are hundreds of differences between the US and Japan. To point to just lifetime employment is meaningless.