by Tyler Cowen
on November 24, 2012 at 6:59 am
in Current Affairs |
Last year, for the first time, sales of adult diapers in Japan exceeded those for babies.
The story is here. For the pointer I thank Fred Smalkin.
And we wonder why Japan is stagnating…
Japan is not stagnating in all matter involving the rectogenital region: bidet, adult diapers.
1) Old folk are old folk for longer than babies are babies.
2) And anyway http://www.telegraph.co.uk/culture/culturepicturegalleries/9698490/Photo-series-of-the-bond-between-a-grandmother-and-her-odd-eyed-white-cat.html?frame=2407644
[non-rhetorical] What is the possible solution here? I mean, I’m willing to accept Sumner-style recommendations that they could make things a lot better with NGDP targeting, but if every year you have more people leaving the workforce than entering it, and those outside the workforce are consuming increasing amounts of resources (via various methods), and you have a relatively democratic system that governs how those resources are allocated: what do you do?
It seems like “pray for a combination of mild productivity enhancements and elderly deaths until something rescues you, like a massive cultural shift, or technological revolution.”
Other potential solutions would be reducing transfers or increasing immigration, but based on my admittedly poor grasp of Japanese politics, those don’t seem likely. And, aren’t there a few dozen other industrial economies on this exact same track?
Korea is managing to hike immigration. The Japanese population has become considerably less racist since the 1980s, so it’s on the table as an option.
Have you ever been to Japan? Japan is not going to open up to non-Japanese immigrants. No way.
There has been a big rise in Chinese immigration to Japan over the last few years. In Tokyo, at least, it’s routine these days to be served by a Chinese person when you go to a convenience store or restaurant.
See chart 14, page 25, of this government report: http://www.moj.go.jp/content/000081971.pdf
Note that the Korean population is going down — this is largely a result of the so-called “special permanent residents,” Korean families left over after WWII, either dying off or naturalizing. The Brazilian population is also going down as many of the imported auto workers from the bubble era have decided to go home. But the Chinese newcomers are holding up the fort for the overall numbers. It helps that they can read Japanese with minimal study.
Meh. My dad suffered an alarming drop in his personal GDP several years ago- he retired.
Many people have trouble distinguishing between income and wealth, evidenced by “tax the rich” measures that focus on income. Income is much easier to measure and track then wealth. Sometimes it’s a reasonable proxy, but not for countries with outlier demographics.
This data is useful in understanding the true burden of a country’s government debt too. I think Japan is gonna be ok.
When lots of babies are being born, the alarm bells go up: what are we gonna do with all these people?
When few babies are being born, the alarm bells go up: look at the trend in GDP!
To be clear, I’m not making the fashionable argument that debt doesn’t matter, or the meaningless distinction between owing debt to foreigners vs. fellow-citizens, but rather understanding debt in the context of wealth (the overall balance sheet.) On this measure, I imagine Italy, for example, is in much better shape than Greece.
Exactly. GDP becomes an obsession only when people have leveraged everything to infinity. Japan, and a lot of other places, will muck along but it won’t be pretty. Immigration won’t save them or us by the way.
What does ‘save’ mean in this context? Japan will ‘muck along’, what does that mean? If it means being a first world country with first world problems and continually increasing life expectancy, well, what else is the point of economies?
I ask because to me Japan is the microcosm of the whole world in 50 years, when the entire world’s population plateaus, and starts declining. Add in potentially huge lifespans due to medical advances and you have the same adult diaper/regular diaper problem worldwide.
What happens then?
How about automation? It’s not surprising that Japan is a leader in this area, is it?
As I mentioned above, aren’t we describing the exact opposite of the scenario that has so many wringing their hands today- viz. supposedly, there aren’t enough jobs to go around?
Agreed, and a good answer. My speculation is the culture that is Japan will be the model for the culture that is the whole world in 100 years.
And it’s not that there aren’t enough jobs it’s that there’s not enough for humans to do, especially as the population plateaus and ages. Automation will only accelerate that problem. So when the robots do everything do we move past ‘jobs’ as a way to distribute resources?
Well, the real questions is what happens when a less wealthy country than Japan reaches this state. Although, I assume nature has a way of dealing with it in poor countries, so maybe a mean middle income countries, say a future China.
Then things change like they always do.
“Save” as in disgorge enough taxes to finance the debts of old and increasingly outnumbered strangers. Won’t happen. Nevertheless with their pride of place and culture I expect Japan will find a way to make things function while remaining Japanese. I don’t expect the US to be as fortunate.
If your dad’s savings (wealth) is enough such that he can survive on it, without other still-current-workers contributing to that wealth, then of course that’s no problem. Do we think that is an accurate analogy to Japan’s savings? Or to other countries, who have even less wealth, but are also on this same demographic path?
I’m not one who rings alarm bells when lots of babies are born, I see that as a great boon in economic terms. Labor is a resource, and all else held equal, having more of it is better, and having less is worse. Also, babies are cute. Unemployment isn’t “having too many people vs. # of jobs” except in the most simplest of terms.
Old folk are old folk for longer than babies are babies.
Right, but by no means all old people end up wearing adult diapers. And for many of those who do, it’s just for a short time right before death.
Off topic – Tyler should really respond to this new Krugman post: http://krugman.blogs.nytimes.com/2012/11/24/a-meta-modeling-meditation
Is this an inevitable demographic-deflation-debt spiral? Basically are all societies go their version of “Turning Japanese”. Basically:
1) Great growth and most enjoy the benefits.
2) Jobs and land get so competitive that the average family starts having less children.
3) Societies start having more savings than investments.
4) Economy, job growth, and wages stagnate so the younger generation faces an even more competitive job market.
5) More competitive means less children to fertility of less than 1.5 children per female. Then the society really starts to have too much savings to investment.
Since most wages in developed nations are stagnating, how can young families have more children? Please show work.
This is the question I was asking above. The whole world may look like Japan in 50-100 years. Is this 1. bad? 2. inevitable? 3. ameliorable?
Haven’t ever gotten real answers.
It is what it is. History and markets are cyclical. It’s bad if you’re a Swedish mechanical engineer with maybe one child counting on tax revenues from Muslim immigrants to maintain your lifestyle in retirement. If you’re a canned beans or adult diaper manufacturer, the future is bright. The mantra of the modern advanced economies is we aren’t going to have more children so we’ll import immigrants who can. I think we will find asking fecund working immigrants to pay the bills for old, retired strangers extremely problematic. And they get old and sick too.
No rabbits to pull out of the hat for this mess.
But that’s sort of my question…is that even a ‘mess’? The world gets older, the population plateaus and maybe even gets smaller. So now all economies have to do is feed and house and clothe and entertain everyone, with everyone being less and less older and older people.
Why is that a ‘mess’? It feels like one, and yet like you said it is what it is. Taken over that time frame almost everything we argue about here becomes kind of pointless.
Like I said, it’s a ‘mess’ if you’re counting on a SS trust fund that’s already been spent, or if you hold government bonds. Or if you’re counting on a constantly expanding economy to mop up inflation-soaked dollars. Though for now we seem to be doing a great job of exporting our inflation.
Low taxes and low debt would get us off this treadmill.
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