Well, let me guess.
Most Japan visitors may have asked themselves why goods and services are so expensive?

Nonetheless to say that prices also depend on the residential area – and most are at Japan’s #1 spot, Tokyo, which is not a fair measure for whole Japan.

However, another right question could be why the same goods and services in the rest of the world are so cheap? At least I did.

My first memories fell on my trips to cities like London or my original home town St Peterburg, cities with high price levels, about which nobody really cares.
Hence, it must be a question of values and attitude.
And that’s not a problem of Japan although my previous articles may raise a feeling of criticism towards Japan.

In terms of attitude, you are better off to forget your “burnt in” price system. Forget it, it’s not worth anything!
Let’s do an experiment for a minute. Imagine your dream house at your most desired location furnished as you like. Please, avoid locations of which you know the prices and conditions, just spend a minute on your dream.

And now, please add a price tag to your dream.

Got it?

People do not come into the world with a standardized and comparable value system. They do not own anything than themselves.
It’s their parents, relatives, surrounding, and the school that setup and refine a value system. But even then, a human being does not know anything about prices.

Prices are abstract, a mere guess of value. And it’s you who strikes or turns down a deal. Yes, there are rogue traders who do not care at all but in an efficient economy such guys disappear very fast since nobody can bet against the market; and the market is usually not very silent.
I really like this attitude of the Arabic world, China, and Hongkong which recommends a price for further solicitation. The rest is up to you.

Back to Japan.
Prices are rarely negotiable and there might be some inefficiencies in Japan’s internal economy. Distribution structures encompassing up to 7 intermediaries passing goods from one to the other look odd in European eyes. For me, this riddle is unsolved but the truth may lie in the relationship culture of Japan. Or more bluntly, do you prefer eating without being afraid of dangerous or distasteful food or cheap, cheap, tsheepah at any cost?

In case you prefer the cheap version, then good luck with the food scandals which shake your attention sometimes. On the other hand, quality comes at a price and many hands are involved in this value creation process. And even Europeans know wholefood shops or organic farmers which command ridiculously high prices.

There we go, ridiculous is the keyword. Ridiculous because agriculture is assumed to be advanced and highly automated in developed countries. Due to such efficiency gains, European farmers produced more milk than the whole population could actually absorb in the 1990’s because of which it was converted into butter piled up on the well known “butter mountain”.

Such oversupply has only one answer: falling prices. And the European Union spends actually 40% of its budget to subsidize farmers in order to offset their income losses besides other measures like tariff barriers.

We come closer: it seems ridiculous because we focus on the outcome and argue with technical efficiency.

But how about people?
Economists know another answer to the efficiency question: a system is efficient if nobody can attain in a better position without harming the position of somebody else.

Of course, economies like Japan’s are much too complex to be explained by  such a simple rule. Income distribution, allocation of wealth, all that matters.

But I would like to see a Western country put into Japanese shoes.
A country which developed very fast in terms of infrastructure, wealth and living conditions. Sure, property prices may be still inflated, so that the government needs to subsidize rice farmers sitting on land worth millions of Yen in order to maintain the supply of rice.

But what is the right approach to tackle a property inflation? The money press which incur ever increasing prices and wages through uncovered paper money? Continued with millions losing their jobs?
Stagnating or even slowly declining wages while keeping prices constant?
Or finishing all of it, accepting the collapse while merely hoping for a better tomorrow? But how do we define value tomorrow?

I do not know and Japan’s problem is not the price level, it’s a symptom for a structural problem which starts with “zombie banks”. But “finger pointers” should look at the Western banks rescued by billions of taxpayer’s money.

In a small Spanish village called Buñol, tons of tomatoes are annually celebrated (or wasted) in the “Tomatina” festival. In Japan, an area not very known for tomato farming, they may cost 100 Yen per piece.


I am looking forward to my delicious mango dessert now (128 Yen per 150g but who cares).


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