Hike in Consumption Tax and its Effect on Cost of Living in Japan

The Japanese economy has been shrinking, and it showed negative growth this year for the third consecutive year. One of the reasons attributed to this phenomenon is reduced spending in the market by consumers. Government authorities blame this on the global economy, which is sluggish and has been uncertain for the past many years. Since the Lehman collapse, the global economy perspectives have never been promising. In an effort to bring up the Japanese economy, the government has devalued the yen manually, which helped the exporters to make more profit. How these measures helped the economy is still under debate, as there should always be a trade-off between the imports and exports.

It is a fact that ever since the government hiked the consumption tax from 5 percent to 8 percent, many people have started putting control on their spending. This control over spending in the market has created less money flow from consumers, the direct impact of which has been visible in the form of shrinking the domestic business. People are more cautious now as they expect one more hike in the consumption tax, which is due in April 2017. The government had delayed the hike, which was supposed to get implemented in October 2015. The consumption tax is 8 percent now, which will be raised to 10 percent. To compensate for the effects of the tax hike, the government has been putting pressure on companies to increase the wages of employees. Many Japanese companies have taken a conservative approach to the increase in salary. Salary has not been increased up to the expectation of economic policy makers.

The practical effects of a consumption tax hike are like this:

Prior to April 2014, if a consumer bought furniture having a displayed price of 100,000 Yen, the consumer had to pay 105,000 Yen.

Now in 2016, if that consumer buys that furniture having a displayed price of 105,000 Yen, then he has to pay 108,000 Yen.

Expected after April 2017: 110,000 yen for that same furniture.

Effectively, there would be an increase of 5,000 yen for that same furniture. But in practical things, it won’t work that simply. The manufacturer has to increase the price of that item since he has to increase the salary of his employees. The shop owner needs to increase the price of the furniture as he also needs to increase the salary of his employees. Overall, the buyer may need to pay something around 115,000 yen, which is an increase of 10,000 yen.

For example, an average person, who used to spend something around 300,000 yen per month in 2014, needs to pay 330,000 yen a month for living. His salary might have increased by around 20,000 yen during these periods. For him, there is only one way to adjust his earnings-spending-savings, and that is reducing the spending. The government needs to focus on real causes of economic growth, such as shrinking population and increasing the aging population. 

When the Japanese government increased the consumption tax from 5 percent to 8 percent on April 1, 2014, it was the first hike after seventeen years. The second phase of the hike from 8 percent was expected in October 2015 but delayed. The government stepped up the tax to cover the rising social welfare costs, which is attributed to the aging population in the country. Japan has one of the lowest birth rates in the world, and the recent population survey revealed that the Japanese population has decreased. Japan has the world’s highest ratio of elderly to young people, a fact that raises serious concern about the country’s economic growth.

Americans Reject Sin-Stained Products

Every product or food that passes through the hands of exploited laborers, be it from any part of the globe, will have the wetness of their sufferings. Giving an opportunity to sell those products in the United States is also a kind of encouraging those exploiters. The United States does not want to encourage such exploiters. This is what President Barack Obama did when he signed a bill on this Wednesday that includes a provision banning U.S. imports of some of those products. 

Fish caught by slaves in Southeast Asia, gold mined by children in Africa, and garments sewn by abused women in Bangladesh are just some examples. Child labor and bonded labor are still prevalent in many societies. While the West was successful in eliminating this evil to an appreciable level, many countries in Africa, Asia, and Eastern Europe are still struggling. The profit-hungry owners employ exploited workers, bonded slaves, and children in manufacturing locations. Even in this 21st century, exploitation is continuing. The United States is now closing a loophole in an 85-year-old tariff law that has failed to keep products of forced and child labor out of America.

Exploitation is a social evil still prevalent in our society. In one way or another, a section of society is made submissive in order to subject them to exploitation. American history was not different. Exploitation and discrimination were at their peak in American society. The colonial rulers and their followers had done enough sin to the generations of Native Americans and people from African countries. 

The stains of the slave trade are still visible on the walls. The great thing is that the United States could evolve as a matured society to show or lead other nations. American society was able to correct the mistakes and come out of the sin that was done by their ancestors. U.S. customs law banning imports of items produced by forced or child labor had gone largely unenforced until now. U.S. law allowed importers to buy things regardless of how they were produced. With the new law implemented, importers cannot find the loophole to justify demand by importing products without verifying the origin. 

Legislation all over the world prohibits child labor and exploited labor, but in practice, it is not implemented. Exploited labor has existed to varying extents through most of the history in every civilization. Before World War II, many children worked in agriculture, home-based industries, factories, and the mining industry in countries including Europe and the American continents. The passage of strict laws helped to reduce child labor in Europe and North America, some East Asian countries, etc., but nothing much changed in Africa and South and Southeast Asian countries. High poverty levels and poor school accessibility are said to be some reasons for child labor. However, exploitation, atrocities towards women, and bonded labor are also high in these countries.

The social evil of exploitation of children in the labor market has been reducing globally, thanks to the efforts made by governments and NGOs. Over the past fifty years, child labor has decreased from 25 percent to 10 percent, but still around 168 million children are involved in child labor worldwide, according to UNICEF.

When child labor was common in Europe, certain cultural beliefs rationalized child labor and encouraged it. Many people thought that work is necessary for the character-building and skill development of children. In many cultures parents inherit a particular trade to their children. In those cultures, child labor was a means to learn and practice that trade from a very early age. That is a different side of the story. 

Forced or exploited labor by children is a social evil. In Asian countries such as India, Pakistan, Indonesia, Thailand, and the Philippines, child labor is a serious problem. Macroeconomic causes encouraged widespread child labor across the world for most of human history. They suggest that the causes of child labor include both the demand and the supply side. By rejecting the sin-stained products, the new U.S. law is going to put control on the demand side.

Be Careful When You Bite a Chocolate

BBC reports today that the U.S.-based confectionery company Mars has ordered a recall of their chocolate products in 55 countries after one customer in Germany claimed to have found pieces of plastic in a Snickers bar he bought. The plastic was traced back to the Mars factory in the southern town of Veghel in the Netherlands. As a quick face-saving measure, the confectionery giant decided to call back many of its products. Fun-size Mars, Milky Way bars, and boxes of Celebrations are affected in the UK. In the Netherlands, Mars and Snickers bars were also affected.

The American chocolate company Mars, Incorporated was started in 1932 in Slough, Buckinghamshire, in the United Kingdom. The company has 29 chocolate brands, including M&M's, Galaxy, Twix, Bounty, and Maltesers. It also makes Wrigley gum, Uncle Ben's Rice, Dolmio pasta sauce, and Pedigree pet food. Mars is one of the largest privately owned businesses in the US and had global sales of US$33 billion last year.

Mars chocolates are popular in Japan. It was just two days before we bought a mini packet of MilkyWay brand Mars chocolate produced at their Australian factory. As per reports, the company recalls chocolates mainly from European countries and is not sure at this moment whether Japan is also included in that list. Japan is one of the chocolate-loving countries.

On Valentine's Day, girls and women give chocolates to boys and men in Japan. Valentine's Day in Japan is not limited to lovers. Even children make gift cards to present to their parents and loved ones. Japan had adopted and customized this Western festival to suit their culture. Presenting chocolates to the loved ones is almost a custom in Japan on Valentine's Day. Chocolate sales shoot up in February compared to other months.

Japan is one of the largest consumers of chocolates. Many Japanese people are a kind of addicted to chocolates such as Nestle Mini Kitkat, Pocky from Glico, Bourbon Alfort Mini Chocolate, Lotte Almond Chocolate, Lotte Ghana Milk Chocolate, etc., to mention a few that come to mind. These chocolates are popular and loved and in most demand in Japan. In every supermarket and convenient shops you can see a wide variety of chocolates, showing the demand for chocolate in Japan.

The sales value of chocolate in 2015 was estimated at around US$3.5 billion in Japan. The growth in chocolate consumption in Japan has been supported by the growing awareness about the health benefits of chocolate. There are some scientific research reports stating that the polyphenol in cacao contains a fine balance of minerals, such as calcium, iron, and magnesium, that are effective in reducing blood pressure, preventing arteriosclerosis, and minimizing the level of stress and the effects of allergy and rheumatism. Consumer awareness about the health benefits of chocolate has significantly increased after being promoted by Japanese educational and entertainment television programs.

The recall only involved products manufactured at the Dutch plant. It covers most countries in Europe and does not extend to the US, where Mars is based. Japanese chocolate lovers are watching the steps and damage control measures the company is taking. Japanese consumers are highly quality conscious, and they expect maximum value for their spending, even if it is for a chocolate. For sure, they won't spend to get a plastic bite. Chocolate lovers in Japan too will be careful for a few days while biting chocolate.

Open Defecation is a War Against Society

There was a catchy news story from India about a 104-year-old woman from a village in Chhattisgarh's Dhamtari district who sold her goats to construct toilets at her home. The most amazing thing is that the prime minister of India, Narendra Modi, in a function, touched her feet as a sign of respect.

It must be inspiring news for all Indians. Prime Minister Modi went to the extent of telling the media persons to write about her instead of writing about him. Keep away all the politics; this very act of Prime Minister Modi is really appreciable. We must learn to keep politics away when dealing with the social issues in our country. I may have different political views that may not match with those of the current ruling party in India. That should not limit me from appreciating them when they do good activities. The moment I restrict myself from appreciating good things even if they are done by my political rivals, I think that would be the height of my intolerance.

Real changes are happening in Indian society. The woman's initiative to build toilets encouraged other villagers to follow her, and they also constructed toilets. The Prime Minister felicitated Kunwar Bai from Kotabharri village of Dhamtari for her efforts to make her village open defecation free.

Open defecation is one of the greatest concerns that modern India faces. With almost 40 percent illiteracy, it is hard to educate the importance of cleanliness and hygiene to a majority of Indians. Open defecation is not only limited to the rural areas in India. The busiest financial capital of the country, Mumbai is notorious for people defecating in open air. 

The issue of open defecation may have a direct relation with education and poverty, but it is not the only reason, at least in India. People having enough money also do not give priority to constructing toilets while constructing homes. Because they find that there is an alternative choice to attend the call of nature. Open defecation is a crime against society rather than an individual's right to enjoy the communication with nature.

There is a biased perception in the Western countries, especially about India, that Indians eat in private rooms and defecate in public. I have heard many black jokes about open defecation in India. Some years back, the BBC had reported about combating open defecation in India and the desperate fact that the dedicated groups working to eradicate this social evil are also losing their war.

The southern state of Kerala is one of the most highly educated places in India. Still, open defecation is an issue of concern in rural areas of Kerala. I remember participating in a campaign organized by Sastra Sahitya Parishad (an NGO promoting scientific awareness in the society) during school days to bring awareness to people about the importance of making toilets in their homes. We marched through villages at night, shouting slogans such as "At least one toilet in each home." That movement could raise awareness at least to some people, and we noticed an increasing activity of constructing toilets in our village.

As the prime minister reiterated, the media should concentrate on highlighting the importance of the initiative taken by Kunwar Bai. Media can influence the public to a great extent. They just need to focus on the development of the country rather than just going behind political rivalries and paid news by business corporates. Media do not need to devote full time to social issues but should not neglect them fully. 

Open defecation is a war against society. Open defecation poses a serious threat to society and public health because it can pollute drinking water sources. This pollution may result in the transmission of illnesses like cholera, diarrhea, and dysentery. Studies have proved that human excreta that are infected harbor various harmful organisms linked to multiple health issues. One gram of contaminated human waste can harbor a range of microbes, including 106 pathogenic viruses and infectious virions, 106–108 bacterial pathogens, 103 protozoan cysts, and 10–104 helminth eggs.

We should not lose in the war. The prime minister's initiative to make India clean is the best chance to mobilize all forces to drive away this ignorance and win our war.