I live in the U.S but I am Asian. When I visit Asian countries I’m always surprised that food overall (groceries and restaurants) tends to be cheaper, even in wealthier countries like Korea and Japan. Even without tipping culture they seem to be able to pay their workers and keep prices low? How do they do it?
In: Economics
“In Asia” is really not an ELI5 question, because Asia has so many different diverse countries and societies that a one-size-fits-all answer isn’t really possible. However, since you asked about Japan, I’ll talk about Japan. This answer is specifically only about Japan and not about any other countries.
The thing about prices is that they are affected by inflation. Inflation is mostly caused by governments adding money to the money supply, which causes the value of commodities to increase relative to the value of money (more properly, the value of money decreases, but when you look at commodity prices it looks like the value of commodities increase, when that’s not actually what happens, but I digress). In the West, most central banks agree that an inflation rate around 2% per year is “healthy”, according to an economic philosophy known as Keynesianism (you can look that up on your own time, I won’t get into it here).
Note that this 2% is compounded. I’ll get back to why this date is important in a moment, but in the 34 years since 1990, at a 2% compounded inflation rate, prices have increased by roughly 97%; this is assuming “healthy” or “target” inflation, not including abnormalities such as Covid. Put another way, due to planned government monetary expansionism (and not accidental or catastrophic unplanned emergencies), prices of commodities have doubled in the last 34 years.
Conversely, [here’s some data from Japan](https://www.macrotrends.net/global-metrics/countries/JPN/japan/inflation-rate-cpi#:~:text=Japan%20inflation%20rate%20for%202022,a%200.52%25%20decline%20from%202018.). You can see from this chart that not only has Japan’s annual inflation been significantly below 2% for the period between 1990 and today (actually roughly 1992), it has in fact even been in the negative for many of those years, as low as -1.35% in 2009. This means Japan’s currency has basically not undergone any inflation since 1990 (ok, 1992). While prices have doubled in North America at 2% inflation over 34 years, prices in Japan have remained constant, which is why commodities in Japan are half as expensive.
Note, however, also, as others have said, that wages in Japan have been likewise depressed. A salary of 10 million Yen per year (roughly $100,000 in equivalent purchasing power, roughly $65,000 USD foreign-exchange-adjusted at current rates) is considered exorbitantly high in Japan; such a salary would barely be middle class in the USA. So it’s all relative. This does make Japan an awesome travel destination, though, as you can make a Western salary and then buy things at half price on vacation.
Latest Answers