Japan's road to harmonious decline: those lazy Japanese are goofing off again.

• Author: Sorman, Guy

Forget what you have heard about the hard-working Japanese salaryman: since the early 1990s, the Japanese have drastically slackened their work habits. Indeed, Tokyo University economist Fumio Hayashi has demonstrated that the main reason behind Japan's twenty years of stagnation has been the decrease in the quantity of work performed by the Japanese.

The government itself has led the way here, starting with its decision to close public administration buildings on Saturdays. Japan's banks followed suit. From 1988 to 1993, the legal work week fell 10 percent, from forty-four hours to forty. This, as much as anything, helped to bring Japan's long-running post-WWII economic "miracle" to its knees.

In the service sector, the decline is even worse than in manufacturing, because services are heavily regulated and partially closed to foreign competition. In the retail sector, which employs a huge number of Japan's unskilled workers--the so-called "morn and pop" shops--Japanese productivity is now 25 percent lower than in Western Europe.

Former Prime Minister Junichiro Koizumi (in power between 2000 and 2004) and his chief economic adviser and minister of finance, Heizo Takenaka, understood all too well that Japan was losing ground in terms of productivity. They sought to counter the trend toward less work through privatization and deregulation.

Japan's powerful bureaucrats, nostalgic for the 1960s model of development, whereby government and its business cronies nurtured the Japanese miracle, strongly opposed this hold, free-market solution. But their model is obsolete, because Japan now competes directly with many other Asian and non-Asian countries, where work habits are of the type that used to prevail among the Japanese.

Moreover, public opinion never supported Koizumi's policy, which was alleged then, as it is now, to be a source of inequality. But that is a canard: real-estate speculation, not privatization, has been the real source of undeserved wealth in Japan. Nonetheless, the newly victorious Democratic Party of Japan has been able to make the accusation stick to free-market policies.

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The recent electoral triumph of Yukio Hatoyama's untested DPJ thus confirmed the popular wish not to follow America's free-market model. Hatoyama makes no economic sense in declaring that growth is important but that happiness comes first. Nevertheless, this sentiment does reflect the mood of many Japanese.

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