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Inflation Shines Spotlight on Japan's Penny-Pinching Geniuses

Posted by: Kenji Hall on August 27, 2008

Only in Japan would a housewife taping plastic flaps to the shelves inside her fridge make it to prime-time TV. Of course, she wasn’t just accessorizing her fridge. She was preventing the chilled air inside from escaping—one of many clever DIY solutions she had dreamt up for lowering her monthly electricity bill.

The Japanese have a term for people like her: setsuyaku no tatsujin, or master penny-pincher. Typically, it applies to a housewife who has good ideas for saving a little here and there. But this being Japan, the tatsujin elevates the mundane task of fiscal belt-tightening to a high art. Those ideas are now being popularized through widely read blogs and media reports.

The suggestions can be extreme: Watch only an hour of TV daily. Flip the breaker switch to off when going out. Reuse bath water to do the laundry and then again to clean the toilet bowl (Japanese consumers pay for their water). Plant a curtain of vines outside windows to keep the house cool in summer. One tatsujin blogger even boasted that she cut the electricity and water bill by a third for her family of four.

These days, setsuyaku tatsujin are attracting more attention than usual. The reason: Inflation is back.

That's a shock for many Japanese who were used to the deflation of recent years. While prices and property values were falling, there was little incentive for consumers to splurge, partly because they weren't feeling as rich as they had before the bubble economy popped in the early 1990s and partly because they could get a better deal if they waited for prices to come down. With the return of inflation--in the April-June quarter, consumer prices rose 1.4%--consumers are bracing for everything from soy sauce to gasoline to get pricier. In July, a Cabinet Office survey showed that nearly 80% of consumers think prices will rise 2% to 5% over the next year. In January, it was 65% of respondents.

Already, government figures suggest consumers are curbing their spending (which is bad for growth because consumer spending accounts for more than half of the country’s gross domestic product). The uptick in prices has added roughly $40.50 a month to the average household's spending, the Japan Research Institute estimated in a report last week.

No wonder so many here are looking for ways to lessen the pain. Lately, though, practicing setsuyaku has become trendy. One reason is that it often coincides with being eco-friendly. That's something the Japanese, whose resource-poor islands make them dependent on fossil fuels imports, take seriously. They sort their trash--there's weekly curbside recycling for paper, plastic, glass and metal and offices and train stations have separate waste bins. Japan Inc. has promoted the idea by developing products that are energy efficient and easier to recycle, and the government has dangled financial incentives for building homes with solar panels and driving gas-electric hybrid cars.

In the past, cost-conscious Japanese were often derided as tightwads. It took an outsider, Nobel laureate Wangari Maathai, to give thriftiness a positive spin. The Kenyan activisit applauded the Japanese for their concept of mottainai, which roughly translates to "don't waste" and comes from a Buddhist term that links all living and inanimate objects.

Not long after Maathai's visit in 2005, environmentalists embraced mottainai as their slogan. The national daily Mainichi Shimbun now runs a weekly mottainai column featuring ideas from readers, and collaborates with trading company Itochu to license a mottainai certification for everything from washable chopsticks to pizza boxes. Recently, author Mariko Shinju tapped into zeitgeist with a best-selling picture book, titled Mottainai Baasan ("Waste-busting Granny"), about an elderly woman who is on guard against wastefulness.

To an economist it might seem blasphemous to suggest that less consumption isn't a bad idea. But if the setsuyaku tatsujin are getting Japanese to rethink their spending habits--and become a bit greener--it's hard to see the harm done.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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