By Norimitsu Onishi　

　　Osaka, Japan—Japan’s economy, after more than a decade of fitful starts, is once growing smartly. Instead of rejoicing, however, Japan is engaged in a nationwide bout of hand-wringing over increasingly signs that the new economy is destroying one of the cherished accomplishments egalitarianism.

　　Today, in a country whose view of itself was once captured in the slogan, “100 million, all-middle class society,” catchphrases sort people into “winners” and “losers,” and describes Japan as a “society of widening disparities.”

　　The moment of reckoning has come as the man given credit for the economic revival , Prime Minister Junichiro Koizumi, prepares to retire in September after more than five years in office. Mr. Koizumi’s Reaganesque policies of deregulation, privatization, spending cut and tax breaks for the rich helped lift the national economy, but at a social cost that Japan’s more than 127 million residents are just beginning to grasp.

　　Thanks to a growing economy and rising corporate profits, companies hired tens of thousands more young Japanese for the start of the fiscal year on April 1. The broad Topix stock index closed recently on a 14-year-high. Commercial land prices in the country’s three biggest metropolitan areas rose for the first time in 15 years, and high-rise luxury apartment buildings have kept sprouting across Tokyo.

　　At the same time, the number of Japanese without any savings has doubled in the last five years, and the number receiving welfare or educational assistance have spiked by more than a third.

　　Mayumi Terauchi, 38, began receiving education aid when 7-year-old son, yuuki, started school last year, to help bear the costs of the backpack, cafeteria lunches and other necessities not covered in public schools. She frets that his place and that of her 1-yaer-old daughter, Natsumi, are already fixed in the new Japan of winners and losers.

　　Ms. Terauchi sees a “huge gap” in quality between public and private schools here in Osaka. But she and her husband cannot afford the private schools, or even the cram schools—for profit supplemental programs—that raise children’s chances of getting into good colleges.

　　“I want to provide them with an education that will allow them to choose from, say, 10 different kinds of jobs” Ms. Terauchi said. “But I can only provide them with an education that will offer them three kinds of jobs. I think it’s wrong that only kids who go to cram schools can choose from 10.”
Her husband works at a small company that makes time recording equipment, and leaving the house at 8 a.m. and returning after midnight on the last train. Ms. Terauchi, who used to work at the same company, is now a homemaker.

　　In Osaka, 28 percent of students receive, based on household income, about＄500 in annual aid from the government. It is the nation’s highest rate, followed by Tokyo, with 25 percent.

　　The focus on the widening economic gap has put Mr. Koizumi on the defensive.

　　“I don’t think it’s bad that there are social disparities,” he said in Parliament, explaining that he favored a “society that rewards talented people who makes efforts.”

　　Mr. Koizumi later appeared to soften his position. “Winners and losers shouldn’t be trapped in those categories. If someone loses once, he should be given a second chance.”

　　From a stratified prewar society, postwar Japan was transformed into a nation where companies offered lifetime employment and made promotions by seniority, not performance.

　　“Until the mid-1990’s, the government used it’s power to contain the widening of social disparities,” said Masahiro Yamada, a sociologist at Tokyo Gakugei University, who has written a best seller called “Society of Disparities In Expectations.”

　　Miyuki Matsuda receives school aid for her 10-yaer-old son. She and her husband, a cement truck driver, also have a 2-yaer-old daughter. Mr. Matsuda, 34, said that among families in her neighborhood both parents work.

　　“I wonder what kind of country Japan is becoming if you’re told you’re either a winner or loser,” she said. “I don’t want to be either. I just want to lead an average life.”