Sheldon Garon, who teaches in both the history and East Asian studies departments at Princeton, is a leading scholar of Japan. But his timely new book, Beyond Our Means: Why America Spends While the World Saves (Princeton University Press; all rights reserved) takes on an issue that’s also important to contemporary policymakers in transition economies: Why some countries save far more of their income than others.
The received wisdom, heavily influenced by the experience of Japan and the east Asian Tigers, is that families’ decisions about savings are generally driven by cultural values derived from Confucian teachings and are thus largely beyond the reach of government policy. So countries on the cusp of development that lack the savings bug – for example, Mexico and South Africa -- must either import large amounts of capital or make do with lower rates of investment. But in this excerpt, which focuses on China, Garon suggests that savings behavior is far more subject to deliberate government manipulation than is generally understood. – Peter Passell
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EXPORTING THRIFT, OR THE MYTH OF "ASIAN VALUES"
To be sure, many East and Southeast Asian societies appear culturally disposed toward thrift. But I question the timelessness and uniqueness of so-called Asian values regarding saving and consumption.
As heretical as it may sound, the widespread “urge to save” in Asian economies has less to do with their shared “Asianness,” and may be more related to their common adoption of savings promotion practices from other countries.
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Although European colonial powers introduced some of the methods, the primary catalyst has been Japan and its historic efforts to increase national savings. Before 1945, Japanese imposed the "Japanese model" on their colonies and occupied territories. More recently, Asian nations consciously emulated the policies underlying postwar Japan’s economic miracle.
Following World War II, international organizations and economists advised developing nations to “mobilize domestic savings” to finance growth. By the 1960s, Japan emerged as the poster child in this international campaign. Led by the influential planner Okita Saburo and his Japan Economic Research Center, Japanese economists touted high saving rates and low consumption to explain the nation’s rapid growth—and “its implications for developing countries.”
After the yen sharply appreciated against the U.S. dollar in 1985–87, Japanese officials became outright missionaries for the cause. As Japanese businesses heavily invested in Southeast Asian production, representatives of the government confidently counseled Southeast Asian states to mobilize household savings. Japan’s Postal Savings Bureau played a leading role, funding yearly meetings of Asian government savings bank officials. Japanese bureaucrats would lecture counterparts on the virtues of the nation’s postal savings system, citing its historical success in establishing the “idea of saving in the minds of the people.” The state’s promotion of saving, they asserted, had proved invaluable to curbing inflation, accumulating capital, and stabilizing society at large.
Similarly the Bank of Japan sponsored working seminars on “savings promotion,” which brought together central bank officials from Asia and the Pacific. These meetings marked one more chapter in the little-known story of learning from the Japanese experience among emerging Asian economies—including South Korea, Singapore, Malaysia, and China.
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