On Jan 1, as Japan celebrated the new year, a 7.5-magnitude earthquake struck the Noto Peninsula, causing buildings to crumble, forcing mass evacuations, and leading to more than 200 deaths. But in the wake of the tragedy, something beautiful happened: an outpouring of support by philanthropic organisations and individuals, including support from beyond Japan's borders. More than 140,000 people donated US$5 million (183.7 million baht) through the Nippon Foundation alone.
This was all the more remarkable because Japan lacks a strong culture of charitable giving. The country ranked 118th in the 2022 World Giving Index, with Indonesia, Kenya, the United States, and Australia taking the top spots. Charity does not matter only in the wake of disasters. It can be important for maintaining economic life. Economists have two fundamental concerns: the objectives of maximising total income and the fair distribution of income.
While the first objective is relatively easy to pursue, the second is rather thorny. We know that if too few actors hold too large a share of the national income, the economy will eventually lack sufficient healthy workers and viable consumers. But we presumably reach the limits of fairness before that point. And achieving consensus on what amounts to a fair distribution of income is no easy feat. Difficulty arises because the relevant values are shaped significantly by individuals' interests and biases, and the imperative of ensuring one's own well-being often takes precedence over the common good.
As the World Giving Index indicates, Christian and Muslim countries generally tend to score particularly high for attitudes toward charity. This probably reflects the deep cultural impact of religious teachings. After all, the Bible is full of calls to help others. "Do not neglect to do good and to share what you have, for such sacrifices are pleasing to God" (Hebrews 13:16). "It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God" (Luke 18:25).
Charity is similarly central to Islamic tradition. In fact, the fourth pillar of Islam is to give alms to the poor, and Muslims are expected to donate a share of their wealth to charity each year. The Quran states that there is a "recognised right, for the needy and deprived" over the wealth of believers (70:24-5). Travelling in Indonesia many years ago, I learned that each local public office would place a barrel in front so that people could contribute rice for the needy.
This is not to say that there is no cultural tradition of philanthropy in Japan. Consider the Japanese folktale -- also familiar to Chinese -- about a small mountain village that gets cut off by heavy snow each winter. Every year, as the cold approaches, those living at the foot of the mountain gather a barrel full of rice, and leave it at the entrance to the mountain.
When spring arrives, those living at the foot of the mountain check the barrel they left months earlier. If it remains untouched, they assume that the villagers managed to make it through the winter on their own rations; if it is empty, they assume that the rice had proved vital to the villagers' survival. There is no fanfare or reward; those providing the rice do not know whether it will be of use. But they deliver it anyway, for the sake of their neighbours.
The fact remains, however, that Japan lags behind other countries when it comes to charitable giving, especially toward outsiders. In 2016, charitable donations by individual Japanese amounted to 0.14% of GDP, compared to 1.44% of GDP in the US. In order to enhance Japanese charitable activities, many institutional improvements must be made.
First, philanthropic organisations must take steps to bolster their own credibility. Yohei Sasakawa, chair of the Nippon Foundation, who is also a noted philanthropist in the fight against Hansen's disease, believes transparent accounts of how funds are used are critical.
Second, tax policies can contribute to increased charitable giving. In Japan, the Furusato Nozei (hometown) taxation system enables taxpayers who live in urban areas to contribute to rural areas in exchange for tax credits.
Recently, I listened to Lin Kobayashi's lecture at the University of Tokyo's economics alumni Zoom meeting. In order to cultivate international leadership, she founded a high school in Nagano, attracting students from all over the world. Naturally, the project requires funding, but her appeal has collected approximately $4 million, primarily through hometown taxation. Moreover, 70% of students receive fellowships and scholarships. This gives me hope that, just as it has elsewhere, the habit of charitable giving can take hold in Japan. © Project Syndicate 1995–2024
Koichi Hamada, Professor Emeritus at Yale University, was a special adviser to former Japanese Prime Minister Abe Shinzo.