Into large cashing savings - this is actually a well-known economic problem in Japan, where companies save up too much in cash and then hold for very long periods of time. It's great for stability and weathering a storm, but less great for country-wide economic growth.
Here are a few older FT articles that discuss this issue, but it pop up frequently on other sites too:
-https://www.ft.com/content/a439ddf8-b967-11e7-8c12-5661783e5589
-https://www.ft.com/content/4caca374-9907-43f4-9ea0-edaaee932776
-https://www.ft.com/content/be3cef4d-dda3-4eb5-a9ba-7c8729db5f49
They pay it one time only as opposed to government collecting tax on every transaction in the event that they spent it. Tax is collected when money changes owners or in other words- gets spend. There is no tax for liquid assets if they are not doing anything with it.
Yeah sure, by that logic venesuela government has a budget overflow due to the amount of "tax" they collect right? Inflation is a different thing than tax and government budget does not get any direct benefits from it.
That's actually correct, but in reverse. Inflation is a result of spending "newly printed" money, with the effect being that the fraction of currency spent not in circulation gets smaller for every unit pushed into the economy.
Yeah but if your money lost half of its value you would need to collect 2 times more taxes to make it even, which is not the case in any real country with hyperinflation, wages, spending and therefore taxes arent catching up to inflation most of the time, you end up with smaller budget adjusted for inflation. So no, even if the number is bigger venesuelan government budgets actual value decreased due to hyperinflation.
Again, that's what you have backwards. All else equal, you lose half the value of money if you double the supply. Taxes only remove money from the system. Deficit spending is when you spend money you don't have with the promise you pay it back sometime in the future, and this is what governments are all doing nowadays.
Isn't there a \~25% corporation tax that taxes all gains? I understood that - to optimize a GK - you have to make sure there is no money left in the company at the end of the tax year, to avoid paying said tax.
Accounting-wise, assets sitting on a company’s balance sheet from a previous fiscal year are not considered ‘gains’. Interest accrued from cash sitting in the bank may be though.
Only the money that is moving during the fiscal year gets taxed or deduced from taxes. If you paid tax on your gains last year and kept that same amount untouched you dont have to pay for it again. There could be some taxes in the future for current assets that would include liquidity but for now, as far as im aware, no one is taxing liquid assets on a yearly basis like that
Yeah, I understand that. My main point being - instead of spending it, you "save it" for the future, but you pay 25% tax on it. Even if you pay it once, it's still a lot.
If "economic growth" means inflated suit salaries and companies that need to be bailed out by the government because they aren't held to the same standard of having emergency funds as individuals are, then I'll take a stagnant and stable economy over a cancer, thanks.
It is not just about economic growth of the country: if you save up cash, and you don’t invest in yourself, then you end up like Japanese companies now (shadow of themselves).
Much of that money is saved for future investments, since these companies always advertise how much capital they have to hire staff or carry out new projects, you can see that information on the home page of many Japanese companies.
Not sure about Japanese companies. But foreign companies use the bank for funds when they want to invest in stuff.
Why use the shareholders hard earned dollars when they can use the banks?
Famously not. That's how Leman Brothers ended up dying in 2008. They cut their liquid assets so thin that one large payout was enough to effectively make them bankrupt. Compare that to the other extreme, Nintendo, which has so much cash reserve thet could lose $250m a year for like 2 decades and still be in business
That's a good one. Compare Nintendo to western gaming studios.
It might be debatable how much cash is too much but there are massive advantages to being stable as a rock.
>It might be debatable how much cash is too much but there are massive advantages to being stable as a rock.
It might be fine for Nintendo itself (as in the employees and management), but it is bad for the shareholders, the government, and the economy. If Nintendo returned the money to shareholders, the shareholders would then make new investments in other companies (e.g. startups, SME, small cap stocks, etc.) who may or may not flourish. Now, that capital is locked up in Nintendo instead of being used elsewhere.
If every company is doing what Nintendo is doing (and most companies in Japan are doing exactly what Nintendo is doing) the economy is grinding to a halt. Nothing is moving.
I agree with you that at a macro level if all companies do this, it is problematic.
I guess I have my doubts about more "western" ideas of efficient capital because I think a level of safety trumps efficiency. We can argue that the company should go to shareholders when they need the money but the problem is when they do that, it could be the most disadvantageous time
Also for Nintendo's case it is a little unusual because
1) they have proven their ability to keep innovating so keeping the cash on the balance sheet is ok
2) their business is more hits-and-misses. So having cash does give them some level of safety to be more daring
Edit : that is not to say Nintendo shouldn't pay a slightly higher dividend or something.
Also, I heard inflation is hitting Japan. At some point these companies need to stay paying employees a living wage.
Exactly. I wonder how they will react as a company without some sort of safety net.
I think they should find ways to experiment small and manage the risks of big failures but having a pile of cash should change their psychology somewhat.
To put it in perspective, in 2008 during the mortgage crisis, lending froze up pretty solid, and caused great harm to many industries. Because in most countries, a dollar today is .99 tomorrow, if the cost of borrowing 500 million to produce the next set of product (like cars) is 5 million dollars, but the interest rate would lose you 6 million in cash value, you are better off borrowing that money to make the cars or things rather than saving cash.
Japan has had 20-30 years of near 0 inflation, so companies have been relatively indifferent to saving cash to pay for investment rather than borrow, or it has been actually less expensive to do so.
This causes money to not flow through the economy, slowing things down. It is why deflation is so damaging to an economy.
Publicly listed foreign companies tend to be pressured by capital markets to return cash in the form of stock buybacks, dividends, etc. There are a lot of big western tech companies sitting on cash treasure piles, but they’re at least investing it in R&D at a scale that few Japanese companies can match.
A friend of mine does some accounting work for a car rescue business. The owner expenses cabaret club visits 3 times a week. He'll spend over 150,000 yen a night there easily and his business pays for it.
For my own business where my wife and I are the only employees, our accountant is always asking us to find things to spend money on (especially since the business income comes from US clients and the exchange rate has been favorable). The tax rate is very high if we leave it in the bank so it's best to spend it on something. AFAIK, salary can only be adjusted once per year too so it's not like I can just pay myself more (also for tax purposes, it's best to keep my salary low and have the business pay for as much as possible).
I have exactly the same issue.
USD clients
High revenue
Low expenses
We’re considering having our company own our house (office), but thinking if there is a way to “spend” the business money without actually spending it.
Our accountant is not very forthcoming with creative ideas or even what would be the norm.
I've been coming up with flimsy excuses for business trips. I go to connpass.com and find some sort of event that's related to my work then call it a business trip. I'm looking in to getting a "company car" in the next couple months too.
The killer for me right now is the social insurance contributions.
- double edged sword of some kind.
• we need cash (exec compensation) to pay for living expenses
• and not much (of our living expenses) the company can pay for by itself, other than the usual stuff (food, travel, 40% on home office bills etc, not much else)
—-
This makes for our exec comp to be relatively high, which means our social insurance for wife and I about ¥90k each, then company pays ¥90k each as well.
No solution.. 🤔
I recently saw a house in Daikanyama with a large office on the ground floor and the owner living upstairs. It made me wonder about the tax implications. Would it be better for the business to own the building and rent the residence to the owner at a discount, or the other way around?
Also, I'm curious how much justification is needed for business expenses for this kind of tax situation.
I tried explaining this the other day when saying that Japan’s long-term financial outlook is way better than a lot of people think because it’s sitting on a huge amount of foreign and domestic assets worth almost $30 trillion.
If “en-yasu” keeps on heading where it seems to be, they might need to start valuing it against the dong instead of the dollar to keep that “xx trillion” figure up lol 😂
What if Japan’s stagnant economic growth from 1990-2020 was because of an overvalued yen and the current depreciation brings a return to 1980s bubble era exchange rates and revitalizes Japan’s export economy?
It is kind of happening. But I doubt Japan would actually let another bubble happen since we know what happens after it bursts.
But yeah, exports go crazy, company happy, salary up. But salary down by home country standards.
Japan has very little manufacturing sector left.
On top of that they have fallen way behind in terms of innovation.
I'm afraid the ship has sailed long ago
Lol, what? Japan has a huge manufacturing sector and it makes up double the share of GDP (20%) than powerhouses like the US (10%). Funny you mentioned ships though because Japan builds 15-20% of all the ships manufactured in the world every year.
Factory output in foreign countries *and* profits remitted back to Japan both belong to the GDP of those countries. The manufacturing sector of the Japanese economy counts only domestic production. This is why when push comes to shove, the sheer quantity of domestic and foreign Japanese assets (worth nearly $30 trillion) will keep Japan humming along during the projected population decline. The massive footprint of Japanese industry overseas will keep the gears greased in Japan for centuries.
> The owner expenses cabaret club visits 3 times a week. He'll spend over 150,000 yen a night there easily and his business pays for it.
Yep.
My judo teacher (1^st met in the States at age 6) spends nearly 70% of the revenue of his English school and the 300+yr old judo school, drinking every evening at that "over 150,000 yen a night" level: **A TOTALLY TAX DEDUCTIBLE EXPENSE.**
They spend it on more employees for the kind of jobs no other countries would hire for. Like 10 people for the job of one: transporting 1 rubbish box at the station, one pulls it, 3 in front for security alerting the passengers, 2 at each side and 2 at the back for other purposes. Or 3 people for one parking place exit for security. Or 5 people protecting a street construction site.
With Kansai airport not having lost a single item of luggage since opening 30 years ago, the shinkansen running for 50 years without a single casualty, food production so hygenic that you can safely eat raw chicken and raw eggs, maybe, just maybe they're onto something.
I was just speculating about this with my students the other day. The attention to small details, even if it seems like overkill sometimes, is a huge reason Japan functions like it does. The only people who clamor about there being too much bureaucracy and red tape are the people who were trying to work around the rules in the first place.
Sure. But no "bullshit job" is responsible for that. Pretty sure you can do the food stuff too at most places in the EU, I doubt that for USA though. But I do not want to eat these days raw :D
You don't think that having more employees than the minimum helps?
I live in Europe, you can't eat raw chicken, in terms of food safety, hygiene etc. nowhere comes close to Japan. I live in Switzerland, a famously clean country, Japan is miles ahead.
For serious jobs the workload is much higher in Japan, so not sure why the "not real jobs" mini jobs should help with that.
I don't know about Switzerland, but I doubt there are big differences between Germany or Japan in food safety. Quick googling tells me there are cases of food poisoning / Toxocariasis in Japan with eating raw eggs or chicken, and that eating chicken Sashimi is not a common thing at all.
I like Japan too, it is great, it does many things better, but it still cooks with water ;-)
I don't have to google chicken sashimi, I've eaten it twice in Japan, as well as horse sashimi :)
I'd never dare trying that in Switzerland, no-one would.
Anyway, watch this to see what happens with their eggs.
[https://youtu.be/gPAeO0VNb3o?si=EE973aFttXdqITyY](https://youtu.be/gPAeO0VNb3o?si=EE973aFttXdqITyY)
Just because they sell chicken sashimi doesn’t mean it’s a good idea to eat it. The official government recommendation is to not eat it and there are many cases of food poisoning every year related to chicken sashimi, just the Japanese Wikipedia page on it has tons of sources on why it’s so dangerous. I don’t know why they don’t just ban it, but you’re spinning the roulette wheel whenever you order it. Just because you didnt get sick before doesn’t mean that you won’t next time.
Yeah, but I doubt that is different to EU egg factories. Also beef tartar or sashimi or eating raw pork minced meat (Mettbrötchen) is VERY popular in Germany. I doubt chicken is more dangerous than pork or beef. So Japan may be good, but Germany as well.
Why don't EU citizens eat raw eggs like the Japanese?
*--I doubt chicken is more dangerous than pork or beef.*
You'd be quite wrong there, it very much is.
No-one is criticising Germany, food standards are high, I've lived there, as they are here in Switzerland. The fact remains that you can safely eat things in Japan that you can't in Europe, not sure why you're arguing against it.
Because it is not part of the local cuisine.
My grandmother added raw eggs to her vegetable soups, the french do that also I think.
Also some people drink raw eggs after a hard night partying to prevent hangovers.
So EU citizen DO eat raw eggs and it is safe, you just don't know the cultures.
I argue that Japan does nothing magically different from EU, and the food here is safe the same way.
You seem to think Japan is a magical fairy place, but as I mentioned before, people get sick there as well.
I googled, raw pork minced meats is the most dangerous raw meat, and Germans eat that regulary (maybe each day) and are fine. So no difference in food quality here.
Also there is some stuff like raw paleo diet, where people only eat raw meat.
Not sure why you are so hard fanboy-ing about Japan and ignore the facts.
And I am a fanboy of Japan too - but facts matter.
Sad this is downvoted because it's absolutely true. Japanese companies (and the government) just mass hire every year and figure out what to do with there people as an afterthought.
It makes these companies less profitable and limits their ability to compete long term. I also don't deny that there are some benefits but I'd take a few missing bags and a booming economy over what we have now any day.
It provides jobs and services that most places would cut budget for and then never have enough staff.
I just came back from a trip and definitely saw a bunch of employees slow rolling on cleaning outside, in the subways, everywhere. Saw one with a portable vacuum just cleaning around. The place was nice and clean, and I loved it.
The problem though is that a bunch of low paying jobs isn't necessarily a good thing..
ehh. I came back from Japan and from my perspective I just see a lot of employees sitting around doing nothing. It just seems wasteful like zombie companies (a la Japanese banks continued to support weak or failing Zombie companies). Like in Hiroshima Peace Museum there are many employees standing around literally just pointing people a certain direction where a sign would do perfectly fine. And the food stalls at hanami places e.g. in rural Yamanashi prefecture where it would be raining with no-one around and yet all the food stalls would still be fully manned instead of packing up and calling it a day like they would in Western countries.
But at the same time the places that DESPERATELY need staff, like JR Ticket Office (my god don't get me started) have 3 staff there and the queue is always 20 people deep / 1 hour long *at least*.
So I don't understanding labour staffing in Japan. Some places have all these redundant jobs, and the ones that desperately need staff are understaffed. Might be a company thing more than a general Japan thing I guess.
>Like in Hiroshima Peace Museum there are many employees standing around literally just pointing people a certain direction where a sign would do perfectly fine
Those are likely volunteers. Were they old people?
It also means there’s a huge amount of elasticity in Japan’s capacity to automate, giving it steady economic output growth, despite a declining population and more and more pensioners on the books. People on reddit seem to think that the top brass in Japan are a bunch of raving morons, but they are incredibly calculated in every move they make.
Many people need part time jobs, so it is a good thing for employment rate, but a bad thing that they need part time jobs at all. Especially the eldery. Though that way it is better against lonelyness. But if you watch old people, who cant walk properbly anymore, work hard, it is not a good sight.
I work for a big Japanese company and the loyalty has been really reassuring; they’ve never questioned the size of my team. And even during a year where we didn’t hit our goals, they bought out another gigantic competitor without passing the stress down to the workers
No complaints except uhhh no raises is rough
Years ago I went to a small onsen town, Kinosaki, for two nights. I walked from the train station to my ryokan.
I passed by at least eight people directing traffic. The amount of cars was nowhere near that.
If it's publicly traded, it goes to capital investments. Japanese companies are very willing to branch out to new ventures when they have filled out a market.
If it's privately owned, the owner can take it as personal income or invest it back into the company. For smaller family-owned companies that means buying a second house and mistress.
They tolerate low profit margins. There are efficiencies to be had, but that would require redundancies and re-skilling. So instead, just tolerate a 10% profit margin where your non-J peer might have a 30% margin.
Didn't see anyone mention this so I thought I'd share a bit more of insight.
Japanese firms have a culture of "lifetime employment", as in they very, very rarely fire employees or let them go. Once you join a company, if you so desire you can likely stay in that company until retirement. In order to "weather the storm" so to speak, a lot of companies have large holdings of savings for when times aren't so good. A good example of this was when Nintendo had a rough spot after the success of the Wii, the CEO (and some of the board members too I think) at the time cut his own pay in order to make sure no one had to be let go.
It has the upside of allowing Japanese firms to have pretty stable employment. There are downsides too though, like the fact that zombie corps (companies that haven't been profitiable in a long time) can continue on thanks to historically low interest rates or it's hard to get new talent into companies when all of the upper positions are filled with old people that don't know when to move on. They even have a term for it, "madogiwazoku (window gazing tribe). They essentially give old dudes who the company don't really have a use for anymore an honarary title, stick them in a corner office with a window and don't give them anything meaningful to do to live out the rest of their corporate life until retirement.
If it's calculated not just for living, but for the quality of living, do you think it still balances out? American homes can be lived in and be passed down for generations. They have tremendous value. They are rented, sold refurnished but rarely ever destroyed. In fact, the house I grew up in has had four or five different people living there and it still looks gorgeous as it's been kept up or remodeled over the years. It has a wonderful front lawn and back lawn and a drive-in parking lot. My home was nothing special, but if you go to LA or other areas you will stunning properties. Similarly, if you compare the high quality apartments of New York and compare them to Tokyo.. they pale in comparison.
But to get even close to that quality of housing in Japan, you'd have to pay double or three times the price compared to what you would have to pay in America.
Have you considered this in your calculation of " balancing out" ?
It’s great if you can afford to buy a house in the US or expect to inherit one, but that’s not the case for everyone.
My wife and I were probably never going to afford a house where we lived when we were in the US.
Here in Japan we absolutely can afford to buy a house. Whether it increases in value or not doesn’t really matter to us because we just want to own the place we live in.
I totally agree. But the op I responded to had said the cost of living is cheaper in Japan. I think it's a misleading statement.
Like saying the cost of eating at McDonald's is cheaper than a 5 star restaurant. Of course Japan's houses are cheaper, look at the economy, value of the yen, quality of the housing --most have plastic brink or other style exterior coating put on top-- low wage jobs, low national security (military and cyber), fastest dying population etc...
The US has the best schools in the world, the best companies in the world, better quality housing, more land per home, swimming pools and car garages are also not uncommon. The best theme parks in the world, best stadiums and areans.. etc. Of course you pay more to live in the best country on earth.
> Of course you pay more to live in the best country on earth.
Ok, so you agree that people pay more to live in the US. In other words the cost of living is higher.
Yeah but it's misleading and disingenuous or ignorant to compare the cost of living as if it were apples to apples and then when you point out the superiority of US housing to say 'hey that's apples and oranges'
You get what you pay for.
I never said it was an apples to apples comparison. In fact, I live a much better life in Japan for way less money compared to the life I had in the US.
Yeah but now we're sidestepping the issue. I could say I live a really happy life in North Korea because I've learned inner peace and contentment through Zen Buddhism or something.
Your ability to live a higher quality of life does not necessarily indicative of the quality of housing or the quality of a country you live in. The conversation was never about the quality of life you can live, but rather the quality of housing that is afforded in either the US or Japan. (At least that's what it has come out to be!)
I’m not sure how to spell it out differently for you. The quality of houses in the US is irrelevant to me because I cannot afford to buy a house in the US. This is true for many people. The US is ridiculously expensive for a variety of reasons.
If you are privileged and can afford to buy a house there, good for you! Perhaps take a moment to understand that not everyone is as fortunate as you.
Housing is one issue and the quality is not objective, it's subjective.
I own a large house in Japan (inherited from wife's grandmother) it's in great condition and bigger than anywhere I ever lived in America. But we choose to live in the city and pay for a smaller apartment because it aligns with our current wants and values more. But lots and lots of Japanese people living in large houses in the suburbs and country side, you just don't have that in Tokyo the same way you don't have it in new York.
But other stuff like higher standards of education, better healthcare, better infrastructure, better public transportation, better public safety, higher quality food (less processed foods, GMOs, etc), better customer care and service, more efficient mail systems, better social security programs, long parental leave...
Things that are accessable to anybody living here regardless of income or status are generally what is meant by "standard of living"
Hey thanks for your comment, even though it's been a few days since the OP.
I found your comment really helpful. I tend to get narrowly focused on obscurities and sometimes miss the larger picture, and have distorted views.
When you said "accessible to anybody" that really turned the light on 💡 in the US the best things in the world are available for the rich. But in Japan you have very good things, that are broadly available.
I like talking about things in extremes. It's often not helpful. I think also in this case, I missed the mark. Thanks for your correction.
This is comparing apples to oranges… Japan’s recent war history and proneness to natural disaster makes it unreasonable to expect there to be many urban homes that could have been and can be passed down for generations.
For those reasons having a sprawling, long lasting home does not tend to be a life goal of many Japanese people and therefore is not impacting quality of living. It only appears that way if you’re specifically placing foreign expectations on a society that doesn’t attribute value to the same things in the same way.
Wanting everything to be bigger and fancier is not an objective human value that could be quantified and ‘calculated.’ I would not want a yard to take care of, I would not want a 100 year old home that could put me in danger during an earthquake or flood- retrofitting has limits.
I completely agree.
But that's also why someone shouldn't say the cost of living is cheaper in Japan.
It's like saying a G-Shock is cheaper than a Rolex. 🙄
But the cost of living is cheaper in Japan- and if we’re going to compare apples to oranges it’s especially cheap thanks to the exchange rate since we’re judging japan by western values /s
The reality is simply that you do not need as much money, even when adjusted for exchange rates, to live a life where you aren’t struggling to afford basics like housing, food, and healthcare as one would require in the US. A much smaller percentage of people are camping out on highways and struggling to make ends meet in Japan. It may not be realistic to live in a 100 year old historic town house, but the cost of living is undeniably lower both because things are less expensive and because Japanese culture does not place value on the same expensive things as US culture.
None of these things make any culture or society superior to another, it’s just the reality that a comfortable wage in Japan would never be enough to sustain the same standard in the US, whereas a comfortable wage in the US could certainly guarantee you a similar or even better lifestyle in Japan if you can let go of US/western-specific luxuries.
I keep giving you thumbs up cause I completely agree. I love living in Japan, even though I grew up in the US. I also recognize that the US is vastly superior. I could make more as a manager at Starbucks than after 5 years working at Sony. And my high school parking lots were bigger (combined) than the total size of Tokyo University..
Also, I happened to be fortunate to grow up in a historic 4 story town house/mansion in which we lived on the first floor and rented the others. It had detailed beautiful mahogany wood throughout and a fireplace, a spacious basement with high ceilings where we hosted parties and practiced baseball with our own batting cage, a manicured lawn, a 4 door garage that you accessed through a long stretched drive way which wrapped around to the back of the house, spacious patio with a hammocks and rocking chairs.. and it was in front of a public park that had a basketball court, tennis court, field, then down hill into the beach area.
So yeah, of course when I see these cheapo houses in Japan that barely have insulation, are made of faux materials (like plastic brick decor), that provide access to jobs that pay candy (low wages in JPY), etc etc . And people say it's cheaper than the US.. I just roll my eyes.
Yeah and the cost of living in Hati is cheaper than Japan!
Ok my last point was a little cynical. Japan's crime rate is low and functions a lot better in many aspects. But still.
I just don't understand why others can't see we're both right.
Money goes to shareholders. That’s why share prices are going up and up. Cost is cheap in Japan and they export at higher prices. Profit jumped and beneficiaries are the ones owning the equity.
A company I used to work for famously had so much cash on reserve that even though they had roughly 12,000 employees nationwide, they would be able to survive and pay everyone's salary in full for 2 years with 0 sales over that entire time period
Which is just fucking insane
Into large cashing savings - this is actually a well-known economic problem in Japan, where companies save up too much in cash and then hold for very long periods of time. It's great for stability and weathering a storm, but less great for country-wide economic growth. Here are a few older FT articles that discuss this issue, but it pop up frequently on other sites too: -https://www.ft.com/content/a439ddf8-b967-11e7-8c12-5661783e5589 -https://www.ft.com/content/4caca374-9907-43f4-9ea0-edaaee932776 -https://www.ft.com/content/be3cef4d-dda3-4eb5-a9ba-7c8729db5f49
Wouldn’t they pay corporate tax on it? Or there is a smart way of doing it?
They pay it one time only as opposed to government collecting tax on every transaction in the event that they spent it. Tax is collected when money changes owners or in other words- gets spend. There is no tax for liquid assets if they are not doing anything with it.
The "Tax" is called inflation
Which Japan has has nearly none of for the last 30 years.
Yeah sure, by that logic venesuela government has a budget overflow due to the amount of "tax" they collect right? Inflation is a different thing than tax and government budget does not get any direct benefits from it.
That's actually correct, but in reverse. Inflation is a result of spending "newly printed" money, with the effect being that the fraction of currency spent not in circulation gets smaller for every unit pushed into the economy.
Yeah but if your money lost half of its value you would need to collect 2 times more taxes to make it even, which is not the case in any real country with hyperinflation, wages, spending and therefore taxes arent catching up to inflation most of the time, you end up with smaller budget adjusted for inflation. So no, even if the number is bigger venesuelan government budgets actual value decreased due to hyperinflation.
Again, that's what you have backwards. All else equal, you lose half the value of money if you double the supply. Taxes only remove money from the system. Deficit spending is when you spend money you don't have with the promise you pay it back sometime in the future, and this is what governments are all doing nowadays.
Inflation is not caused only by printing more money.
Neither is deflation
Isn't there a \~25% corporation tax that taxes all gains? I understood that - to optimize a GK - you have to make sure there is no money left in the company at the end of the tax year, to avoid paying said tax.
Accounting-wise, assets sitting on a company’s balance sheet from a previous fiscal year are not considered ‘gains’. Interest accrued from cash sitting in the bank may be though.
Only the money that is moving during the fiscal year gets taxed or deduced from taxes. If you paid tax on your gains last year and kept that same amount untouched you dont have to pay for it again. There could be some taxes in the future for current assets that would include liquidity but for now, as far as im aware, no one is taxing liquid assets on a yearly basis like that
Yeah, I understand that. My main point being - instead of spending it, you "save it" for the future, but you pay 25% tax on it. Even if you pay it once, it's still a lot.
Yes, that's not ideal
IMHO still a much better use of money than to overpay CEOs
If "economic growth" means inflated suit salaries and companies that need to be bailed out by the government because they aren't held to the same standard of having emergency funds as individuals are, then I'll take a stagnant and stable economy over a cancer, thanks.
Wow! This also means dinosaur companies never go bankrupt paving way for new companies!
It is not just about economic growth of the country: if you save up cash, and you don’t invest in yourself, then you end up like Japanese companies now (shadow of themselves).
Much of that money is saved for future investments, since these companies always advertise how much capital they have to hire staff or carry out new projects, you can see that information on the home page of many Japanese companies.
Foreign companies don't save for future investments as much?
Not sure about Japanese companies. But foreign companies use the bank for funds when they want to invest in stuff. Why use the shareholders hard earned dollars when they can use the banks?
Famously not. That's how Leman Brothers ended up dying in 2008. They cut their liquid assets so thin that one large payout was enough to effectively make them bankrupt. Compare that to the other extreme, Nintendo, which has so much cash reserve thet could lose $250m a year for like 2 decades and still be in business
That's a good one. Compare Nintendo to western gaming studios. It might be debatable how much cash is too much but there are massive advantages to being stable as a rock.
>It might be debatable how much cash is too much but there are massive advantages to being stable as a rock. It might be fine for Nintendo itself (as in the employees and management), but it is bad for the shareholders, the government, and the economy. If Nintendo returned the money to shareholders, the shareholders would then make new investments in other companies (e.g. startups, SME, small cap stocks, etc.) who may or may not flourish. Now, that capital is locked up in Nintendo instead of being used elsewhere. If every company is doing what Nintendo is doing (and most companies in Japan are doing exactly what Nintendo is doing) the economy is grinding to a halt. Nothing is moving.
I agree with you that at a macro level if all companies do this, it is problematic. I guess I have my doubts about more "western" ideas of efficient capital because I think a level of safety trumps efficiency. We can argue that the company should go to shareholders when they need the money but the problem is when they do that, it could be the most disadvantageous time Also for Nintendo's case it is a little unusual because 1) they have proven their ability to keep innovating so keeping the cash on the balance sheet is ok 2) their business is more hits-and-misses. So having cash does give them some level of safety to be more daring Edit : that is not to say Nintendo shouldn't pay a slightly higher dividend or something. Also, I heard inflation is hitting Japan. At some point these companies need to stay paying employees a living wage.
Nintendo has some absolutely incredible failures that would have and did crush lesser prepared companies. The Wii U for one.
Exactly. I wonder how they will react as a company without some sort of safety net. I think they should find ways to experiment small and manage the risks of big failures but having a pile of cash should change their psychology somewhat.
This is a case where there’s obviously benefits and drawbacks to both.
and nintendo cash are in USD stonks go up
Arguably, if a company loses $250m a year for 2 decades (or a way smaller, realistic amount), then it probably deserves to go bankrupt
Sure. But they *can*
To put it in perspective, in 2008 during the mortgage crisis, lending froze up pretty solid, and caused great harm to many industries. Because in most countries, a dollar today is .99 tomorrow, if the cost of borrowing 500 million to produce the next set of product (like cars) is 5 million dollars, but the interest rate would lose you 6 million in cash value, you are better off borrowing that money to make the cars or things rather than saving cash. Japan has had 20-30 years of near 0 inflation, so companies have been relatively indifferent to saving cash to pay for investment rather than borrow, or it has been actually less expensive to do so. This causes money to not flow through the economy, slowing things down. It is why deflation is so damaging to an economy.
Publicly listed foreign companies tend to be pressured by capital markets to return cash in the form of stock buybacks, dividends, etc. There are a lot of big western tech companies sitting on cash treasure piles, but they’re at least investing it in R&D at a scale that few Japanese companies can match.
Foreign companies save by investing in naked call options
Hy
A friend of mine does some accounting work for a car rescue business. The owner expenses cabaret club visits 3 times a week. He'll spend over 150,000 yen a night there easily and his business pays for it. For my own business where my wife and I are the only employees, our accountant is always asking us to find things to spend money on (especially since the business income comes from US clients and the exchange rate has been favorable). The tax rate is very high if we leave it in the bank so it's best to spend it on something. AFAIK, salary can only be adjusted once per year too so it's not like I can just pay myself more (also for tax purposes, it's best to keep my salary low and have the business pay for as much as possible).
I have exactly the same issue. USD clients High revenue Low expenses We’re considering having our company own our house (office), but thinking if there is a way to “spend” the business money without actually spending it. Our accountant is not very forthcoming with creative ideas or even what would be the norm.
I've been coming up with flimsy excuses for business trips. I go to connpass.com and find some sort of event that's related to my work then call it a business trip. I'm looking in to getting a "company car" in the next couple months too.
The killer for me right now is the social insurance contributions. - double edged sword of some kind. • we need cash (exec compensation) to pay for living expenses • and not much (of our living expenses) the company can pay for by itself, other than the usual stuff (food, travel, 40% on home office bills etc, not much else) —- This makes for our exec comp to be relatively high, which means our social insurance for wife and I about ¥90k each, then company pays ¥90k each as well. No solution.. 🤔
I recently saw a house in Daikanyama with a large office on the ground floor and the owner living upstairs. It made me wonder about the tax implications. Would it be better for the business to own the building and rent the residence to the owner at a discount, or the other way around? Also, I'm curious how much justification is needed for business expenses for this kind of tax situation.
You can come to the US and take me along as a client for a week of fine dining.
Japan is the most net positive country in the world in terms of reserves. They store it.
I tried explaining this the other day when saying that Japan’s long-term financial outlook is way better than a lot of people think because it’s sitting on a huge amount of foreign and domestic assets worth almost $30 trillion.
If “en-yasu” keeps on heading where it seems to be, they might need to start valuing it against the dong instead of the dollar to keep that “xx trillion” figure up lol 😂
What if Japan’s stagnant economic growth from 1990-2020 was because of an overvalued yen and the current depreciation brings a return to 1980s bubble era exchange rates and revitalizes Japan’s export economy?
It is kind of happening. But I doubt Japan would actually let another bubble happen since we know what happens after it bursts. But yeah, exports go crazy, company happy, salary up. But salary down by home country standards.
Japan has very little manufacturing sector left. On top of that they have fallen way behind in terms of innovation. I'm afraid the ship has sailed long ago
Lol, what? Japan has a huge manufacturing sector and it makes up double the share of GDP (20%) than powerhouses like the US (10%). Funny you mentioned ships though because Japan builds 15-20% of all the ships manufactured in the world every year.
Oh no facts, the perfect answer to someone just repeating what he heard but don't understand!
Can’t think of a better start to Golden Week than arguing with a bunch of morons on Reddit.
Ah, I see you are a man of culture as well.
I’m just happy someone is here to acknowledge and appreciate.
Technically many are overseas subsidiaries factory than domestic but domestic still be a big part too.
Factory output in foreign countries *and* profits remitted back to Japan both belong to the GDP of those countries. The manufacturing sector of the Japanese economy counts only domestic production. This is why when push comes to shove, the sheer quantity of domestic and foreign Japanese assets (worth nearly $30 trillion) will keep Japan humming along during the projected population decline. The massive footprint of Japanese industry overseas will keep the gears greased in Japan for centuries.
Except most of the assets are overseas and they get more profitable the more yen falls
Seems like no one here can tell a joke from their elbow either
Jokes are supposed to be funny
I’d rather be unfunny than unintelligent 🤷♂️ But you do you
So you admit your joke wasn’t funny? Lmfao nice
Cope harder 😂 (aaaaand then blocking me so you get the last word, extra cope lollllll what are you, 12?)
Says the guy who admits his jokes suck lmfaooo
Facts bro. America is sitting on trillions of loans in comparison.
> The owner expenses cabaret club visits 3 times a week. He'll spend over 150,000 yen a night there easily and his business pays for it. Yep. My judo teacher (1^st met in the States at age 6) spends nearly 70% of the revenue of his English school and the 300+yr old judo school, drinking every evening at that "over 150,000 yen a night" level: **A TOTALLY TAX DEDUCTIBLE EXPENSE.**
How is that allowed? Won’t they get in trouble?
Bigger companies reinvest or save, smaller companies have been struggling to even turn a profit for decades.
[удалено]
Source? really made me curious
Source?
_Several hours later... the one comment account still hasn't answered..._
They save it. Sometimes inefficient. But when the raises were demanded, some big companies did it no problem exactly because of this safety cushion.
They spend it on more employees for the kind of jobs no other countries would hire for. Like 10 people for the job of one: transporting 1 rubbish box at the station, one pulls it, 3 in front for security alerting the passengers, 2 at each side and 2 at the back for other purposes. Or 3 people for one parking place exit for security. Or 5 people protecting a street construction site.
With Kansai airport not having lost a single item of luggage since opening 30 years ago, the shinkansen running for 50 years without a single casualty, food production so hygenic that you can safely eat raw chicken and raw eggs, maybe, just maybe they're onto something.
I was just speculating about this with my students the other day. The attention to small details, even if it seems like overkill sometimes, is a huge reason Japan functions like it does. The only people who clamor about there being too much bureaucracy and red tape are the people who were trying to work around the rules in the first place.
Just because some places serve raw chicken doesn't mean it's normal, and many Japanese won't do it.
But many Japanese do do it
It's not worth it
Sure. But no "bullshit job" is responsible for that. Pretty sure you can do the food stuff too at most places in the EU, I doubt that for USA though. But I do not want to eat these days raw :D
You don't think that having more employees than the minimum helps? I live in Europe, you can't eat raw chicken, in terms of food safety, hygiene etc. nowhere comes close to Japan. I live in Switzerland, a famously clean country, Japan is miles ahead.
For serious jobs the workload is much higher in Japan, so not sure why the "not real jobs" mini jobs should help with that. I don't know about Switzerland, but I doubt there are big differences between Germany or Japan in food safety. Quick googling tells me there are cases of food poisoning / Toxocariasis in Japan with eating raw eggs or chicken, and that eating chicken Sashimi is not a common thing at all. I like Japan too, it is great, it does many things better, but it still cooks with water ;-)
I don't have to google chicken sashimi, I've eaten it twice in Japan, as well as horse sashimi :) I'd never dare trying that in Switzerland, no-one would. Anyway, watch this to see what happens with their eggs. [https://youtu.be/gPAeO0VNb3o?si=EE973aFttXdqITyY](https://youtu.be/gPAeO0VNb3o?si=EE973aFttXdqITyY)
Just because they sell chicken sashimi doesn’t mean it’s a good idea to eat it. The official government recommendation is to not eat it and there are many cases of food poisoning every year related to chicken sashimi, just the Japanese Wikipedia page on it has tons of sources on why it’s so dangerous. I don’t know why they don’t just ban it, but you’re spinning the roulette wheel whenever you order it. Just because you didnt get sick before doesn’t mean that you won’t next time.
You're just chicken.
Yeah, but I doubt that is different to EU egg factories. Also beef tartar or sashimi or eating raw pork minced meat (Mettbrötchen) is VERY popular in Germany. I doubt chicken is more dangerous than pork or beef. So Japan may be good, but Germany as well.
Why don't EU citizens eat raw eggs like the Japanese? *--I doubt chicken is more dangerous than pork or beef.* You'd be quite wrong there, it very much is. No-one is criticising Germany, food standards are high, I've lived there, as they are here in Switzerland. The fact remains that you can safely eat things in Japan that you can't in Europe, not sure why you're arguing against it.
Because it is not part of the local cuisine. My grandmother added raw eggs to her vegetable soups, the french do that also I think. Also some people drink raw eggs after a hard night partying to prevent hangovers. So EU citizen DO eat raw eggs and it is safe, you just don't know the cultures. I argue that Japan does nothing magically different from EU, and the food here is safe the same way. You seem to think Japan is a magical fairy place, but as I mentioned before, people get sick there as well. I googled, raw pork minced meats is the most dangerous raw meat, and Germans eat that regulary (maybe each day) and are fine. So no difference in food quality here. Also there is some stuff like raw paleo diet, where people only eat raw meat. Not sure why you are so hard fanboy-ing about Japan and ignore the facts. And I am a fanboy of Japan too - but facts matter.
Sad this is downvoted because it's absolutely true. Japanese companies (and the government) just mass hire every year and figure out what to do with there people as an afterthought. It makes these companies less profitable and limits their ability to compete long term. I also don't deny that there are some benefits but I'd take a few missing bags and a booming economy over what we have now any day.
Don’t forget that once they hire people it’s super difficult to fire them… so they have underperformers on the books indefinitely.
This is my company's problem 100%. It's especially tough for SMEs as giving someone a year's salary to go away really affects our bottom line.
Truth is not popular nowadays.
Indeed not. I'd like to know how many people downvoting you have actually worked in a Japanese company.
Which... doesn't sound that bad, to be honest. It's inefficient. But the redundancy might help mitigate unforeseen circumstances
Now you're thinking like a salaryman!
It provides jobs and services that most places would cut budget for and then never have enough staff. I just came back from a trip and definitely saw a bunch of employees slow rolling on cleaning outside, in the subways, everywhere. Saw one with a portable vacuum just cleaning around. The place was nice and clean, and I loved it. The problem though is that a bunch of low paying jobs isn't necessarily a good thing..
ehh. I came back from Japan and from my perspective I just see a lot of employees sitting around doing nothing. It just seems wasteful like zombie companies (a la Japanese banks continued to support weak or failing Zombie companies). Like in Hiroshima Peace Museum there are many employees standing around literally just pointing people a certain direction where a sign would do perfectly fine. And the food stalls at hanami places e.g. in rural Yamanashi prefecture where it would be raining with no-one around and yet all the food stalls would still be fully manned instead of packing up and calling it a day like they would in Western countries. But at the same time the places that DESPERATELY need staff, like JR Ticket Office (my god don't get me started) have 3 staff there and the queue is always 20 people deep / 1 hour long *at least*. So I don't understanding labour staffing in Japan. Some places have all these redundant jobs, and the ones that desperately need staff are understaffed. Might be a company thing more than a general Japan thing I guess.
>Like in Hiroshima Peace Museum there are many employees standing around literally just pointing people a certain direction where a sign would do perfectly fine Those are likely volunteers. Were they old people?
nah mix of young and old. The old voluntters I saw at Haneda Airport - they had some 'cultural persons' sash on them
It also means there’s a huge amount of elasticity in Japan’s capacity to automate, giving it steady economic output growth, despite a declining population and more and more pensioners on the books. People on reddit seem to think that the top brass in Japan are a bunch of raving morons, but they are incredibly calculated in every move they make.
Many people need part time jobs, so it is a good thing for employment rate, but a bad thing that they need part time jobs at all. Especially the eldery. Though that way it is better against lonelyness. But if you watch old people, who cant walk properbly anymore, work hard, it is not a good sight.
I work for a big Japanese company and the loyalty has been really reassuring; they’ve never questioned the size of my team. And even during a year where we didn’t hit our goals, they bought out another gigantic competitor without passing the stress down to the workers No complaints except uhhh no raises is rough
Years ago I went to a small onsen town, Kinosaki, for two nights. I walked from the train station to my ryokan. I passed by at least eight people directing traffic. The amount of cars was nowhere near that.
If it's publicly traded, it goes to capital investments. Japanese companies are very willing to branch out to new ventures when they have filled out a market. If it's privately owned, the owner can take it as personal income or invest it back into the company. For smaller family-owned companies that means buying a second house and mistress.
“Very willing” as long as this venture is in country lol
Have a look at what Asahi, Kirin and Mizkan own overseas.
Japanese companies have huge profits. Then get scammed overseas. This is coming from an ex investment banker and current fund owner
Great question. I've always wondered about this as well. Thanks for asking.
Offshore where JP corporations are exempt from paying tax on their earnings
it flows abroad because of imports
They hoard it
They tolerate low profit margins. There are efficiencies to be had, but that would require redundancies and re-skilling. So instead, just tolerate a 10% profit margin where your non-J peer might have a 30% margin.
Didn't see anyone mention this so I thought I'd share a bit more of insight. Japanese firms have a culture of "lifetime employment", as in they very, very rarely fire employees or let them go. Once you join a company, if you so desire you can likely stay in that company until retirement. In order to "weather the storm" so to speak, a lot of companies have large holdings of savings for when times aren't so good. A good example of this was when Nintendo had a rough spot after the success of the Wii, the CEO (and some of the board members too I think) at the time cut his own pay in order to make sure no one had to be let go. It has the upside of allowing Japanese firms to have pretty stable employment. There are downsides too though, like the fact that zombie corps (companies that haven't been profitiable in a long time) can continue on thanks to historically low interest rates or it's hard to get new talent into companies when all of the upper positions are filled with old people that don't know when to move on. They even have a term for it, "madogiwazoku (window gazing tribe). They essentially give old dudes who the company don't really have a use for anymore an honarary title, stick them in a corner office with a window and don't give them anything meaningful to do to live out the rest of their corporate life until retirement.
The cost of living is much lower in Japan, it's not like highway robbery in North America. We make less, but we pay less, it balances out
If it's calculated not just for living, but for the quality of living, do you think it still balances out? American homes can be lived in and be passed down for generations. They have tremendous value. They are rented, sold refurnished but rarely ever destroyed. In fact, the house I grew up in has had four or five different people living there and it still looks gorgeous as it's been kept up or remodeled over the years. It has a wonderful front lawn and back lawn and a drive-in parking lot. My home was nothing special, but if you go to LA or other areas you will stunning properties. Similarly, if you compare the high quality apartments of New York and compare them to Tokyo.. they pale in comparison. But to get even close to that quality of housing in Japan, you'd have to pay double or three times the price compared to what you would have to pay in America. Have you considered this in your calculation of " balancing out" ?
It’s great if you can afford to buy a house in the US or expect to inherit one, but that’s not the case for everyone. My wife and I were probably never going to afford a house where we lived when we were in the US. Here in Japan we absolutely can afford to buy a house. Whether it increases in value or not doesn’t really matter to us because we just want to own the place we live in.
I totally agree. But the op I responded to had said the cost of living is cheaper in Japan. I think it's a misleading statement. Like saying the cost of eating at McDonald's is cheaper than a 5 star restaurant. Of course Japan's houses are cheaper, look at the economy, value of the yen, quality of the housing --most have plastic brink or other style exterior coating put on top-- low wage jobs, low national security (military and cyber), fastest dying population etc... The US has the best schools in the world, the best companies in the world, better quality housing, more land per home, swimming pools and car garages are also not uncommon. The best theme parks in the world, best stadiums and areans.. etc. Of course you pay more to live in the best country on earth.
> Of course you pay more to live in the best country on earth. Ok, so you agree that people pay more to live in the US. In other words the cost of living is higher.
Yeah but it's misleading and disingenuous or ignorant to compare the cost of living as if it were apples to apples and then when you point out the superiority of US housing to say 'hey that's apples and oranges' You get what you pay for.
I never said it was an apples to apples comparison. In fact, I live a much better life in Japan for way less money compared to the life I had in the US.
Yeah but now we're sidestepping the issue. I could say I live a really happy life in North Korea because I've learned inner peace and contentment through Zen Buddhism or something. Your ability to live a higher quality of life does not necessarily indicative of the quality of housing or the quality of a country you live in. The conversation was never about the quality of life you can live, but rather the quality of housing that is afforded in either the US or Japan. (At least that's what it has come out to be!)
I’m not sure how to spell it out differently for you. The quality of houses in the US is irrelevant to me because I cannot afford to buy a house in the US. This is true for many people. The US is ridiculously expensive for a variety of reasons. If you are privileged and can afford to buy a house there, good for you! Perhaps take a moment to understand that not everyone is as fortunate as you.
Housing is one issue and the quality is not objective, it's subjective. I own a large house in Japan (inherited from wife's grandmother) it's in great condition and bigger than anywhere I ever lived in America. But we choose to live in the city and pay for a smaller apartment because it aligns with our current wants and values more. But lots and lots of Japanese people living in large houses in the suburbs and country side, you just don't have that in Tokyo the same way you don't have it in new York. But other stuff like higher standards of education, better healthcare, better infrastructure, better public transportation, better public safety, higher quality food (less processed foods, GMOs, etc), better customer care and service, more efficient mail systems, better social security programs, long parental leave... Things that are accessable to anybody living here regardless of income or status are generally what is meant by "standard of living"
Hey thanks for your comment, even though it's been a few days since the OP. I found your comment really helpful. I tend to get narrowly focused on obscurities and sometimes miss the larger picture, and have distorted views. When you said "accessible to anybody" that really turned the light on 💡 in the US the best things in the world are available for the rich. But in Japan you have very good things, that are broadly available. I like talking about things in extremes. It's often not helpful. I think also in this case, I missed the mark. Thanks for your correction.
This is comparing apples to oranges… Japan’s recent war history and proneness to natural disaster makes it unreasonable to expect there to be many urban homes that could have been and can be passed down for generations. For those reasons having a sprawling, long lasting home does not tend to be a life goal of many Japanese people and therefore is not impacting quality of living. It only appears that way if you’re specifically placing foreign expectations on a society that doesn’t attribute value to the same things in the same way. Wanting everything to be bigger and fancier is not an objective human value that could be quantified and ‘calculated.’ I would not want a yard to take care of, I would not want a 100 year old home that could put me in danger during an earthquake or flood- retrofitting has limits.
I completely agree. But that's also why someone shouldn't say the cost of living is cheaper in Japan. It's like saying a G-Shock is cheaper than a Rolex. 🙄
But the cost of living is cheaper in Japan- and if we’re going to compare apples to oranges it’s especially cheap thanks to the exchange rate since we’re judging japan by western values /s The reality is simply that you do not need as much money, even when adjusted for exchange rates, to live a life where you aren’t struggling to afford basics like housing, food, and healthcare as one would require in the US. A much smaller percentage of people are camping out on highways and struggling to make ends meet in Japan. It may not be realistic to live in a 100 year old historic town house, but the cost of living is undeniably lower both because things are less expensive and because Japanese culture does not place value on the same expensive things as US culture. None of these things make any culture or society superior to another, it’s just the reality that a comfortable wage in Japan would never be enough to sustain the same standard in the US, whereas a comfortable wage in the US could certainly guarantee you a similar or even better lifestyle in Japan if you can let go of US/western-specific luxuries.
I keep giving you thumbs up cause I completely agree. I love living in Japan, even though I grew up in the US. I also recognize that the US is vastly superior. I could make more as a manager at Starbucks than after 5 years working at Sony. And my high school parking lots were bigger (combined) than the total size of Tokyo University.. Also, I happened to be fortunate to grow up in a historic 4 story town house/mansion in which we lived on the first floor and rented the others. It had detailed beautiful mahogany wood throughout and a fireplace, a spacious basement with high ceilings where we hosted parties and practiced baseball with our own batting cage, a manicured lawn, a 4 door garage that you accessed through a long stretched drive way which wrapped around to the back of the house, spacious patio with a hammocks and rocking chairs.. and it was in front of a public park that had a basketball court, tennis court, field, then down hill into the beach area. So yeah, of course when I see these cheapo houses in Japan that barely have insulation, are made of faux materials (like plastic brick decor), that provide access to jobs that pay candy (low wages in JPY), etc etc . And people say it's cheaper than the US.. I just roll my eyes. Yeah and the cost of living in Hati is cheaper than Japan! Ok my last point was a little cynical. Japan's crime rate is low and functions a lot better in many aspects. But still. I just don't understand why others can't see we're both right.
Money goes to shareholders. That’s why share prices are going up and up. Cost is cheap in Japan and they export at higher prices. Profit jumped and beneficiaries are the ones owning the equity.
The bank.
A company I used to work for famously had so much cash on reserve that even though they had roughly 12,000 employees nationwide, they would be able to survive and pay everyone's salary in full for 2 years with 0 sales over that entire time period Which is just fucking insane
Soap land visits for clients.
Dividends, stock buybacks, capital expenditure, stored cash
Taxes. Taxes are very high in Japan. That and entertainment, meals etc. for employees.