The Cost of Being Too Frugal
Think frugality is a win/win all around? Japan doesn’t think so.
Playing devil’s advocate a little, let’s step back from YOU MUST BE FRUGAL! to take a look at a real-life example of how frugality can create unexpected problems.
Japan learned to be real frugal in its so-called “Lost Decade” of the 1990′s:
The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.
Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyo residents in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.
Japan’s economy has continued to grow thanks to exports. It has had to rely on them, because its people aren’t consuming much of anything. Guess what’s happening now that economies around the world are starting to tumble? Japan’s economy lost 12.7% (annualized) in the last three months of last year.
It’s a cautionary tale which I fear will go unheeded by other nations until it is too late.We are frugal at our core, never more so than when our survival is at stake. And a lot of people are feeling a lot of Darwinian love of late.
Source: JSOnline
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This entry was posted by admin on Monday, March 2nd, 2009 at 9:24 pm and is filed under In The News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
What will be interesting to me is what will happen in China with this economy. They’ve been big savers and have been able to rely on the global spending frenzy to keep their economy flowing. Now that it’s slowing down, they’re going to have to (as a society) draw down their savings in order to keep the circulation of money and goods/services going (which is what you hit on with Japan), but the downside to that is that we will have created another society of spenders.
We shall see.