Abstract
In market economies, people fall into poverty under two conditions. First, people cannot earn enough money to cover their cost of living. This happens when people do not have enough assets and abilities to sell to others (e.g., due to unemployment or disability) and/or if they are confronted by high costs of living (e.g., due to sickness). Second, the people under the first condition do not receive aid from anybody. Even if people do not have enough money to make a living, they need not fall into poverty as long as they have good friends, families, or adequate insurances.
Give a man a fish and you feed him for a day; teach him how to fish and you feed him for a lifetime.
Lao Tzu
Lao Tzu, who is usually considered to be around 6th century BCE, is an ancient Chinese philosopher and the founder of Taoism.
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Notes
- 1.
The argument suggests that it is very important to have good spouses, children and friends; and have good relationship with them. If they are not good, they can be a burden for us by increasing the risks of negative shocks.
- 2.
We may also describe it as the “crowding-out effect” of government’s provision of social security on private investment in the formal and informal insurances for various risks (c.f. Sect. 2.3.1). When the government increases its expenditure for social security, private expenditure and time for self-help will be reduced, that is, they will be crowded out (c.f. Costa-Font 2010). Such crowding-out effects of social security will have deep impacts on society, especially when they lead to declining fertility that endangers the sustainability of the social security system and of the society. Note that crowding-out effect can affect mutual aid when the self-help system is enriched by the development of a financial market system (c.f. Sect. 5.3.2). Hence, the development of the market system is also likely to have contributed to declining marriage, fertility and friendship in the modern society.
- 3.
The ratio dropped in 2002 because the collection of pension contributions shifted from the local governments to the national social insurance agency. When the local governments were responsible, they collaborated with the neighborhood associations in collecting the contribution. The basic downward trend since the early 1990s is explained by the decrease in income and the increasing distrust of the sustainability of the public pension system. When people do not pay the contributions, they do not receive any pension payment, and face troubles in their lives after retirement. However, they will not be in trouble when there is generous public assistance. Thus, the low contribution rate to the public pension system can be explained as a moral hazard problem associated with the generous public assistance programs.
- 4.
See Tachibanaki (2005) for a comprehensive study on the income inequality in Japan.
- 5.
The definition of “poverty” here is relative poverty; hence, it does not indicate that these children are in absolute poverty.
- 6.
The youth unemployment rate was increasing in the 1990s after the burst of the bubbles (c.f. Mitani 2008). It has been recently declining in Japan and is around 5% as of 2016. This is in sharp contrast with the high rates in most of other developed countries. Due to the declining young population in Japan since 1995, the demand for young workers has become stronger. Even if young people cannot find regular jobs, they tend to chose to work at low wages partly because they cannot get much support from the government and families if they are unemployed. See Arai et al. (2015) for explanation of some changes in the labor market for the young Japanese.
- 7.
Garon (2002) provides an interesting and convincing argument about how the Japanese government historically has tried to discourage people to depend on the public assistance program, and encourage them to depend on their families and communities.
- 8.
A good reference for the public assistance program can be found in NIPSSR (2014, Chap. 6).
- 9.
If an elderly person receives the pension payment, the difference between the minimum standard of living (¥134,570) and the pension income (¥65,000) will be paid to him/her in the public assistance program.
- 10.
The Japanese government started to emphasize the importance of social inclusion and the support for poor people to be independent. A new law was implemented in 2015 to enhance such policies.
- 11.
It is necessary to emphasize that adequate subsidies should be provided for education to internalize the external effects of education and training.
- 12.
The expansion of lending for elderly people may be useful and not just from in terms of saving public funds. If the money is given to the elderly people, say, in the form of public pension, it may eventually find its way to the pockets of their children and grandchildren in the forms of gifts and inheritances. If the money is lent to the elderly people, the government may be able to recover some spending from the elderly person’s inheritances.
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Yamashige, S. (2017). Poverty. In: Economic Analysis of Families and Society. Advances in Japanese Business and Economics, vol 16. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55909-2_9
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